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CHICAGO   STAR 
BINDSRY 
224  S.  SDtinf  St.,   L. 
Tel.  MUtual 


LAV/    LI& i\ 

OF 
LOS  ANGELES  COUNTY 


A   TREATISE 


Cj}£  Jain 

RELATING-:TO 

BANKERS  AND  BANKING. 


By 


JAMES   GRANT,   M.A.,   ESQ., 

OP  THE   MIDDLE  TEMPLE,   BARRISTER   AT   LAW; 
AUTHOR   OP   "THE   LAW   OP   CORPORATIONS   IN   GENER\L." 


PHILADELPHIA: 

.  T.  &  J.  W.  JOHNSON  &  CO., 
LAW    BOOKSELLERS    AND    PUBLISHERS, 

No.    197    CHESTNUT    STREET. 
1857. 


T 


ft) 


PREFACE. 


These  pages  are  the  result  of  an  endeavour  to  compile  the  law  re- 
lating to  the  business  of  banking,  as  gathered  as  well  from  statutes  as 
from  the  decisions  at  common  law,  in  equity,  and  in  bankruptcy.  A 
work  on  such  a  plan,  if  properly  executed,  seems  to  be  wanting,  and 
the  author  trusts  that  his  attempt  to  supply  the  void  will  not  prove 
wholly  unacceptable  to  the  class  of  persons  for  whose  use  it  is  princi- 
pally designed — the  professional  advisers  of  the  great  banking  interest 
of  this  country.  The  first  duty,  it  is  conceived,  of  any  one  who  deals 
with  a  subject  of  so  great  importance,  and  such  general  interest,  is 
to  aim  solely  and  entirely,  to  the  exclusion  of  all  other  purposes, 
at  practical  utility ;  accordingly  from  his  book  the  author  has  carefully 
excluded  all  ambitious  attempts  at  scientific  disquisition:  the  endea- 
vour has  been  not  to  speculate  how  the  law  might  be  improved,  not  to 
lay  down  what  it  ought  to  be,  but  what  it  is ;  so  that  every  one,  whether 
concerned  for  a  person  carrying  on  the  business  of  banking  solely,  or  in 
a  common  law  partnership,  whether  a  shareholder  or  director  in  a  bank- 
ing copartnership,  under  statute  7  Geo.  IV.,  or  in  a  joint  stock  company 
under  statute  7  and  8  of  the  Queen,  might  find  here  the  law,  so  far  as  it 
has  hitherto  been  prescribed  by  statutory  enactment,  or  developed,  ascer- 
tained and  explained  by  judicial  decisions,  clearly,  accurately,  and  use- 
fully stated.  In  this  view,  the  plan  has  been  followed  of  placing  before 
the  reader  not  merely  statements  of  the  dry  points  of  law,  which  were 
decided  in  the  cases  collected ;  but,  as  a  rule,  a  summary  of  the  principal 
facts,  and  occasionally  of  the  arguments  urged  before  the  court,  together 
with  the  main  grounds  on  which  the  judgment  proceeded,  are  also  pre- 
sented. By  this  means,  and  by  the  endeavour  to  lay  down  no  position 
or  principle  unaccompanied  by  examples  to  illustrate  its  application  and 
effect,  it  has  been  hoped  to  provide  facilities,  in  a  compendious  form,  for 
the  solution  of  every  question  that  can  arise,  provided  such  question,  in 
its  nature,  falls  within  any  of  the  classes  of  questions  which  have  already 
passed  into  res  judicatce.  By  this  means,  at  any  rate,  it  may  be  hoped 
that  a  person  who  consults  this  work,  in  order  to  know  what  are  his 
rights  or  liabilities,  and  what  the  proper  course  of  conduct  in  any  given 
January,  1857. — 2 


b7'S\% 


jv  -      !  II  i:     LAW     OF    BANKING. 

f  oiroumstanoes,  will   be  enabled   readily  to  observe  and  to  de- 
irhether  the  principles  and  rules  stated  under  the  head  to  which 
hi.-  difficulty  belongs,  have  been  applied  to,  or  deduced  from,  circum- 
stances the  same  as,  or  analogous  to,  those  of  his  particular  ease,  and 
whether  the  reasons  assigned  by  the  court  meet  the  difficulty  and  govern 

the  I 

'  In  i>rd<  r  to  render  the  Treatise  more  widely  available  for  every-day 
reference,    the   rol<  rtdons,    cautions,   &o.,  for   the  conduct  of 

bankers,  which  the  author  has  thought  it  desirable  to  interpose,  while 
they  have  been  immediately  derived,  in  all  cases,  from  the  observations 
of  the  judges  in  law  and  in  equity,  have  been — as  it  is  hoped  will  be 
found — as  much  as  possible  expressed  in  the  language  of  business, 
divested  of  legal  technicalities,  and  adapted  for  the  probable  require- 
ments of  practical  men. 

It  may  1 bjeoted  that  the  plan  of  this  work  is  incomplete,  foi  not 

separately  and  specifically,  the  subject  of  the  law  relating  to 
the  Hank  of  England.  The  answer  is,  that  law  is  spread  over  several 
hundreds  of  statutes — the  titles  alone  of  these  statutes  fill  about  200 
-  iif  th«'  statute  book; — an  adequate  statement  of 'it  would  have 
occupied,  even  in  a  condensed  form,  a  space  sufficient  to  have  probably 
doubled,  at  the  lowest  estimate  that  could  be  formed,  the  bulk  of  this 
volume  ;  while  the  whole  of  that  additional  matter  would  have  been  found 
quite  useless  for  the  general  purposes  of  those  for  whom  the  work  is 
designed,  being  only  serviceable  to  such  persons  as  might  wish  to  ascer- 
tain the  relations  of  the  Hank  of  England  to  the  Government,  in  reaped 
of  the  management  and  other  details  concerning  the  national  debt, 
N  iw,  on  these  subjects  it  would  be  impossible  to  present  tin- 
law  in  a  Bhape  at  once  compendious  and  useful;  every  one  with  expe- 
rienoc  in  suoh  matters  knows,  that  in  practice  no  result  that  is  Batisfac- 
iii  be  had,  except  by  recourse  to  the  words  of  the  statutes  them- 
selves, viewed  in  connection  as  a  whole.  For  these  reasons,  it  has  been 
decided  not  to  attempt  dealing  with  this  branch  of  the  law  relating  to 
tin-  1!  ink  of  England  ;  what  has  been  attempted  on  this  head  is  to  pre- 
-•  m  a  full  view  of  tin-  law,  whether  contained  in  statutory  enactments 
or  in  judicial  decisions — in  the  first  case  in  the  very  language  of  parlia- 
ment-- as  it  relates  to  the  monopoly  of  the  Bank  of  England,  in  its  bear- 
upon  the  rights  and  liabilities  of  the  banking  interest  throughout 
the  country,  together  with  all  such  matters  couueeted  with  government, 
and  hank.  Stock,  \c("|  and  the  practice,  on  various  points,  of  the 
Hank  of  England,  &C.,  as  hankers  and  their  customers  an'  entitled  to 
t  they  shall  find  information  upon,  in  a  work  of  this  nature. 

\  -mutuary  vi.-w  of  the  legislation  respecting  the  Bank  of  England 
and  it-  monopoly  is  not  without  it<  interest,  and  will  be  found  suffi- 
cient!;. Useful  a-  an  introduction  t,,  many  of  the  subjects  treated  in  the 
following  pages  to  justify  insertion  lure 

•  Seconal  i  and  the  regulations  of  the  Stork  Ex- 

change Commit)  Fenn  on  English  n  Funds,  Ac,  pp 


PREFACE.  v 

In  1694,  parliament  gave  power  to  incorporate  a  body  of  persons  as 
The  Governor  and  Company  of  the  Bank  of  England,  who  were  enabled 
to  purchase  and  retain  lands,  &c,  and  to  aliene  the  same;  but  the  cor- 
poration was  only  to  endure  until  the  twofold  condition  should  be  com- 
plied with,  by  the  government,  of  giving  a  twelvemonths'  notice  of 
dissolution,  at  any  time  after  1st  August,  1705,  and  repaying  the  capital 
borrowed  from  the  bank.  Their  existence  as  a  body  politic  has  been 
prolonged,  their  original  powers  and  privileges  being  on  most  occasions 
altered,  and  latterly  limited,  by  successive  statutes  down  to  1844,  com- 
monly known  as  the  Bank  Charter  Act,  under  which  it  stands  at  present, 
liable,  according  to  that  statute,  to  be  put  an  end  to  at  any  time  upon 
twelvemonth's  notice  given  after  1st  August,  1855,  and  upon  repayment 
by  parliament  to  the  bank  of  the  sum  of  £11,015,  100,  the  debt  then 
due  from  the  public  to  the  bank,  &c,  and  upon  payment  to  the  bank  of 
all  arrears  of  the  sum  of  £100,  000  per  annum  (the  "  yearly  fund"),  and 
also  upon  repayment  of  all  principal  and  interest  which  shall  be  due  to 
the  bank  upon  all  such  tallies,  exchequer  orders,  exchequer  bills,  or 
parliamentary  funds,  which  the  bank  shall  then  have  remaining  in  their 
hands ;  such  cessation  of  their  existence,  powers,  &c,  to  take  place  at 
the  expiration  of  the  said  notice.  Any  vote  or  resolution  of  the  House 
of  Commons,  signified  under  the  hand  of  the  speaker  in  writing,  is  suffi- 
cient notice.  Soon  after  the  establishment  of  the  bank,  they  obtained 
an  enactment  "  that  no  other  bank  or  any  corporation,  society,  fellow- 
ship, or  constitution,  in  the  nature  of  a  bank,  should  be  erected,  or 
established,  permitted,  suffered,  count  enancedor  allowed  by  act  of  Par- 
liament, within  this  kingdom. (bj  Ten  years  later  was  passed  the  enact- 
ment, which,  with  limitations  from  time  to  time,  has  subsisted  to  our 
own  day,  and  which  forbade  any  other  body  politic  erected  or  to  be 
erected,  or  any  other  persons  united  or  to  be  united  in  covenants  or  part- 
nership exceeding  six  persons,  in  England,  to  borrow,  owe,  or  take  up 
any  money  on  their  bills  or  notes  payable  at  demand,  or  at  any  less  time 
than  six  months  from  the  borrowing  thereof.(c)  In  1742,  the  privilege 
was  again  solemnly  recognized  by  Parliament, (d\  that  no  other  bank 
should  be  erected,  established,  or  allowed  by  Parliament ;  and  that  it 
should  not  be  lawful  for  any  body  politic,  or  for  any  other  persons  united 
in  covenants  or  partnership  exceeding  six  persons,  in  England,  to  borrow, 
owe  or  take  up  any  money  on  their  bills  or  notes  payable  at  demand  or 
at  any  less  time  than  six  months  from  the  borrowing. 

In  1781,  this  enactment  was  repeated  verbatim, (e\  as  it  was  in 
1800. (/)  At  length,  in  the  year  1826,  came  a  limitation  of  the  bank's 
monopoly  to  London  and  a  district  of  sixty-five  miles  around  it,  by  which 
any  body  politic,  erected  for  the  purposes  of  banking,  and  any  number 
of  persons  united  in  covenants  or  partnership,  although  exceeding  the 
number  of  six,  may  carry  on  business  as  bankers  in  England,  and  make 
and  issue  their  bills  or  notes  at  any  place  or  places  in  England  exceed- 

(4)  8  &  9  Will.  &  M.  c.  20.  (c)   7  Anne,  c.  7,  s.  61. 

(d)  15  Geo.  2,  c.  13,  s.  5.  (e)  21  Geo.  3,  c.  60,  s.  12. 

(/)  39  &  40  Geo.  3,  c.  28,  s.  15. 


v ,  Q  R  AN  T    0  N    HIE    L  A  W    0  F    B  A  N  K  I X  U. 

ing  sixty-five  milee  from  London,  made  payable  on  demand,  or  other- 

at  some  place  or  places  specified  on  the  same,  and  may  borrow,  owe 
or  take  up  any  money  on  their  bills  or  notes  so  made  and  issued  at  any 
such  place,  &c,  provided  they  have  no  house  of  business,  as  bankers,  in 
London,  &c.,  &a  :  and  the  Bank  of  England  was  enabled  to  erect  branch 
banks  in  any  part  of  England. (<j)  In  1833,  however,  any  body  politic, 
and  any  other  persons  united,  <fcc,  in  partnership,  though  exceeding  the 
number  of  six,  in  business  as  bankers,  were  allowed  to  make  bills  or 
promissory  notes  payable  by  an  agent  in  London,  or  to  draw  on  such 
agent,(A)  payable  on  demand,  or  otherwise,  in  London,  and  for  any  less 
amount  than  £50,  which  they  could  not  do  before.  Still,  it  was,  the 
same  year,  enacted,  that  no  body  politic,  no  society,  company,  or  per- 
sons in  covenants  or  copartnerships,  exceeding  six  persons,  shall  make 
or  issue  in  London,  or  within  sixty-five  miles  thereof,  any  bill  of  ex- 
change or  promissory  note,  or  engagement  for  the  payment  of  money  on 
demand,  or  upon  which  any  holder  might  obtain  payment  on  demand  ; 
but  any  such  body  might  carry  on  business  within  the  said  limits,  pro- 
vided they  did  not  borrow,  owe,  or  take  up  money  on  their  bills  or  notes 
payable  on  demand,  or  at  any  less  time  than  six  months  from  the  bor- 
rowing :(/')  but  then  as  a  compensation,  Bank  of  England  notes  were 
made  a  legal  tender  anywhere  but  at  the  Bank  of  England  or  the  branches. 
In  1844,  a  new  system  was  introduced, (/t)  steps  were  taken  towards 
getting  rid  of  the  country  bank  circulation  of  notes,  in  time,  by  holding 
out  inducements  to  bankers  to  cease  issuing,  and  by  prohibiting  bankers 
who  had  once  ceased  from  resuming  the  issue,  and  by  prohibiting  every 
banker  who  was  not  issuing  his  own  notes  on  6th  May,  1844,  to  issue  for 
the  future  ;  it  was  also  enacted,  that  any  society  or  company,  or  any  per- 

in  partnership,  though  exceeding  six,  in  business  as  bankers,  in 
London  or  within  sixty-five  miles,  may  draw,  accept,  or  indorse,  bills  of 
exchange,  not  being  payable  to  bearer  on  demand  ;  and  in  the  same  year, 
the  system  of  joint  stock  banking  companies  was  established//)  the  sys- 
tem of  banking  copartnerships  having  been  set  up  in  1826.  Prior  to 
is^i;.  nowhere  in  her  Majesty's  dominions,  at  all  events  nowhere  in 
England,  could  more  than  six  persons  associate  together  for  the  purpose 
ol  carrying  on  the  banking  business. (m\  But  there  never  was,  appa- 
rently, anything  in   the   nature  of  legal  restriction,  to  prevent  private 

-  in  London,  not  having  more  than  six  partners,  from  issuing  their 
own  notes  payable  to  bearer;  and  the  historical  fact  is,  that  Goldsmith's 
ootes,  as  private  bank  notes  were  then  called,  were  issued  by  private 
bankers  in  London  for  some  years  after  the  Bank  of  England  was  estab- 
lished. 

\\ "ith   respect  to  those  comparatively  new  modes  of  carrying  on  the 
business  of  banking,  the  banking  copartnerships,  and  joint  stock  bank- 

ompanies,  much  attention  has  been  paid,  to  place  before  the  reader 
the  law  relating  to  them  in  as  clear  a  tight  as  possible;  the  subject  of  di- 

(h)  3  &  4  Will.  4,  c.  83,  s.  2. 
■  3.  (fc)   7  &  8  Vict.  c.  32. 

(0  7  &  8  Vi.t.  c  i  L3.         („,)  Lord  Cranworth,  V.  C,  1  Sim.  N.  S.  234. 


CONTENTS.  vjj 

rectors'  powers  and  liabilities,  civil  and  criminal,  the  rights  and  liabili- 
ties, and  remedies  of  shareholders,  as  involved  on  the  bankruptcy,  or 
winding  up  of  these  bodies,  and  also  generally,  it  is  hoped,  will  be  found 
explained  in  as  satisfactory  a  manner  as  the  present  state  of  the  law  ad- 
mits of. 

The  subject  of  colonial  banks  has  not  been  omitted,  and  there  is  sub- 
joined a  Summary  View  of  the  Law  relating  to  Savings'  Banks. 

An  Index  of  matters,  which  no  pains  has  been  spared  to  render  com- 
plete, is  annexed,  for  the  purpose  of  rendering  the  volume  generally  ac- 
cessible :— a  Table  of  Cases  decided,  and  another  of  Statutes,  have  been 
added,  for  the  convenience  of  professional  persons,  who  are  accustomed 
to  refer  to  law  treatises  by  those  means. 

Middle  Temple, 
Nov.  18,  1856. 


TABLE  OF  CONTENTS. 


i 


The  pages  referred  to  are  those  between  brackets,  [  ] . 

Table  of  Cases  cited. 

Statutes  cited. 

Chap. 

I.  The  general  outline  of  the  Relations  between  Banker  and  Cus- 
tomer, and  the  Principles  and  Rules  of  Law  governing  those  rela- 
tions, ........ 

II.  The  Rules  and  Principles  governing  Cheques  or  Drafts  on  Bankers,     12 

III.  The  Duties  and  Rights  of  Bankers  in  respect  of  Bills  of  Exchange 

made  payable  at  their  Banking-houses,       .  .  .  .104 

IV.  The  Duties  of  Bankers  in  respect  of  the  Orders  of  their  Customers,  115 

V.  The  Obligations  of  Bankers  giving  Accountable  Receipts,  .  129 

VI.  The  Rights  and  Liabilities,  criminal  and  otherwise,  of  Bankers  on 
the  Deposit  with  them  of  a  Customer's  Securities  for  safe  custody 
or  other  special  purpose ;  as  also  on  the  taking  of  Securities  against 
Loans  or  Advances  made  to  Customers,     ....  138 

VII.  The  Rights  and  Remedies  on  Guarantees,  Bonds,  &c,  given  to 
Bankers  by  third  persons  to  secure  Advances  to  Customers,  and 
when  given  to  secure  the  Fidelity,  &c,  of  Clerks,  Officers,  &c,     .  220 

VIII.  The  Principles  upon  which,  on  a  Customer's  Running-account,  Pay- 
ments made  by  him  into  the  Bank  are  to  be  appropriated,  .  278 

IX.  The  Rules  regulating  the  Lien  which  a  Banker  has  upon  Securities, 

Goods,  Shares,  &c,  of  Customers,  when  placed  in  his  hands,         .  283 

X.  The  Law  as  to  Banking  Partnerships  constituted  at  Common  Law, 
and  also  as  to  the  Rights,  Remedies  and  Liabilities  of  Bankers, 
in  dealing  with  Firms  as  Customers,  ....  291 

XL  The  Rules,  Principles  and  General  Considerations  on  which  the 
conduct  of  Bankers  is  to  be  guided  on  the  Bankruptcy  of  Cus- 
tomers ;  the  Rights  of  Bankers,  and  the  several  modes  of  realiz- 
ing them,  &c,  together  with  the  Law  relating  to  the  Bankruptcy 
of  Bankers  themselves,       .  .  .  .  .  .314 


j  1     THE    LAW    OF    DAN  KINO.. 

XII  Societies,*  •  an,l 

iblie  character,  and  of  persons  bearing  a  repre- 

>f  the  latter  to 
lating  to  the  Public 

.         .  .  340 

\I1I.   ■•  ■<  m  affording 

odation  by  way  of  Dii  .  .  •  •  381 

XIV.  1y  relating  to  Country  Banks,  and  their  Bank 

■.■I  governing  transact  Corresi   indents, 

:    '■!  .  i .  .ml  in  case  of 

Bankruptcy,  >v.>..    .......  399 

X\'.  and  Enactments  relating  to  Banking  Copartnerships 

:  G     .  i.  • .  ■■.and  to  Shares  and  Bnareholdi 
I  \m  ctors  and  other  <  Officers  therein,  and  the  Rights  and  Remedies 
her  with  the  subjects  of  the  Bankruptcy  and 
Winding-up  the  affairs  of  these  bodies,       ....  15:'. 

XVI.  The  Decisions  and  a  summary  oftfc  Joint 

k  Banking  Companies  constituted  under  1  \  113, 

.  comprising  the  Right  j  of  Customers  and  Share- 

holders respectively, the  Duties  and  Responsibilities,  criminal  and 

-wise,  of  Directors,   Managers  and   other   Officers;  and  the 
ts  of  the  Bankruptcy  and  Winding-up  the  affairs  of  these 
bodies,        ........  579 

XVII.  A  Summary  of  the  Law  of  Savings'  Banks,  chiefly  as  affects  ordi- 
nary Bankers  becoming  connected  with  these  Institutions,  .  61 1 

Index  ok  Matti  .......  625 


TABLE   OF   CASES. 


The  pages  referred  to  are  those  between  brackets,  [  ]. 


Abbot  v.  Douglas,  19,  91,  406. 
Abbott  v.  Rogers,  580. 

■  v.  Stratton,  357. 

Abraham  v.  Hannay,  556. 

,  R.  v.  102. 

Acraman  v.  Herniman,  235. 

Adair,  Clark  v.  60. 

Adams  v.  Claxton,  178,  210,  347. 

,  Noble  v.  93. 

Ade,  Parker  v.  108. 
Albrecht,  Duncuft  v.  371,  491. 
Alder  v.  Keigkley,  386. 
Alderbury  Union,  Mills  v.  276. 
Alexander  v.  Barker,  607. 

v.  Burchfield,  50,  52,  56,  95, 

97. 

,  Ex  parte,  198. 

,  Hart  v.  130,  303. 

v.  Mackenzie,  516. 

v.  Vaughan,  610. 

Allcock,  Watson,  v.  235. 
Allday,  Green  v.  18. 
Allen  v.  Dundas,  40. 

v.  Edrnundson,  106. 

,  Hancom  v.  375. 

v.  Reeves,  17. 

v.  Kemble,  436. 

Allenby,  Camidge  v.  31,  33,  66,  409, 

410,  414. 
Alsager  v.  Currie,  335,  337,  382,  385. 
Alston,  M'Gahey  v.  273. 
Amory  v.  Mereweather,  63. 
Ancher  v.  England,  Bank  of,  391. 
Anderson,  Brown  v.  280. 

,  England,    Bank  of  v.  5,    6, 

439,  457,  459. 
,  Lowndes  v.  404,  423. 

v.  Thornton,  265. 

Anderton,  Bradbury  v.  7. 
Angas's  case,  492,  565. 
,  Ness  v.  483,  492. 


Anson  v.  Towgood,  367. 
Appach,  Ex  parte,  345. 
Appleton,  Henderson  v.  412. 

v.  Sweetapple,  408. 

Archer  v.  Hudson,  206,  241. 
,  Ireland,  Bank  of  v.  32, 


383. 


Arkwright,  Ex  parte,  179,  180. 

Armitage  v.  Hamer,  461. 

Armitstead,  Ex  parte  re  Dilworth,  141. 

,  Ex  parte,  151,  153. 

Armstrong  v.  Burnet,  490,  493. 

,  Ex  parte,  179. 

,  Ness  v.  403,  492. 

Arthur,  Jones  v.  38. 
Ashby,  Tomkins  v.  129. 

,  Vere  v.  307. 

Ashton  y.  Langdale,  Ld.  496. 

v.  Dalton,  197,  284. 

Atkin  v.  Barwick,  9. 

Atkins,  Ex  parte,  139,  152,  169. 

Atkinson,  Ex  parte,  314. 

,  Reg.  v.  135,  268,  602. 

Att.  Gen.,  Casberd  v.  201. 

,  Hodge,  v.  192. 

Attwood  v.  Banks,  308. 
Atwood  v.  Crowdie,  164. 
Aubert  v.  Walsh,  80. 
Ault,  Lyth  v.  130. 
Auriol  v.  Smith,  122,  360. 

v.  Thomas,  328. 

Australasia,  Bank  of  v.  Breillat,  11,  525, 
526,  538. 

,  Bank  of  v.  Harding,  610. 

Australia,  Royal  Bank  of,  Re,  530. 
Aylesbury,  Lady,  Popharn  v.  405,  406. 

Backer,  Price  v.  233. 
Badcock,  Sadlers'  Comp.  v.  181. 
Badnal  v.  Samuel,  232. 
Bagge's  case,  485. 
Bailey,  Cumming  v.  324. 


QBAN1    OH     I  II  I :    LAV,     OJ    BAB  B  [NO. 


— .  W.iin  v.    I 

per,  244. 

1  14. 

v.  Charil 

122. 

,  Palmer  i 

Baldwin,  Cambridge,  University  <>i   \. 



Hull  v.  Morrcll.   I 
1  v.  Hum 
Pickard  r. 
Bankht  i  !.  Be,  317. 
IS:ink-  ..  308. 

.  Bell  v.  2 

v.  Colwell 

.  Bx  parte, 



Banner,  ICac 

Bantock,  Bockley  v.  L94. 
TreuteD  v.  203. 

parte,  L92,  193. 

'-  v.  : 

v.  Wainwrighl 

Bardflley,  Bradl< 
Bard 

-  v.  114. 

Hartr.  Mason  v. 

.'..  Bl. 

■     ;.  509,  512, 

.  D 

r,  Alexander  v.  • 
v.  Bnttn  70,  480,  482, 

v.  IVirkcr.  264. 

.  Price  v.  242,  252. 

Barlow,  Jordan  i 
Barned,  Middleton  v.  382. 

:'    mi 

.  Btarey  v. 

Barnett,  Brandao  \.  11,  168,  283,  284, 

.  Bretton  v.  5. 

.  Bx  parte,  IT:-.  L82,  206,  207. 

BarnewaU  v.  Sutherland,  472,  176,  601. 
Barrington,  &  ■ 

"  .  L0. 

.  i    Benley,  I 

.  Wilson  \. 

H  i  r  '  D  T.  221. 

.  Wingfield  v.  500. 

parte,  262. 


•    132. 

Batson,  Latimer  v.  211. 

v.  Spearman,  227. 

b  v.  White,  44. 

•i  v.  Howell.  45. 

Baym 
Bazeley,  B. 

■. .  Crisford,  405. 
Beaman,  H 

adeBborongh,  Ld 
imont,  Blake  r.  I 

in,  Pott  v.  328. 

Bebb,  Bx  parte, 

Beck  v.  Bobley,  175. 

Bi  ckington,  Chapman  v.  263. 

ral.  427. 

Beecb  v.  Cempe, 

ie  v.  Levy,  L9. 
Belcher  v.  Campbell,  138,  144,  182. 

v.  Capper,  213. 

,  Ex  parte,  317. 

v.  Jones,  86. 

v.  Lloyd,  335. 

v.  ParBons,  347. 

.  Sadler  v.  171,  172. 

Bell  v.  Banks,  236. 

v.  Buckley,  388. 

v.  Carey,  338. 

,  Dodgsoo  v.  483,  492. 

.  Baton  v.  341. 

v.  Fisk,  172. 

v.  Gardiner,  207. 

,  Glynn  v.  359. 

,  Eolmes  \.  207,  221. 

,  Horsley  v.  341. 

,  Kirk  r. 

,  Meux  v.  185,  209. 

,  Thompson  v.  6,  297,  298,  519. 

v.  Welch,  253. 

Bellamy  v.  Majoribanks,  26,  31,  34,  58. 

JO. 
BeUasis,  Brown  v.  353. 

B  Mil.  of.  v.  Pagan, 

v.  M'Cleod,  205,  vy>. 

,   foung   v.    in.  208, 

18  i. 
Benjamin  \ .  England,  Bank  of,  12  L. 
■  tt,  Bx  parb  '.  577, 

,  Mills  v.  315,  324. 

,  Bicketl  v.  31 1. 

.  Hdl, -on.  v.  51,  58,  59. 

.  Whitewell  v.  1 7. 

Benson,  Bx  parte,  l  .">i . 

v.  Parry, 

Bentham  v.  Chesterfield,  Lord,  9 1. 
Bentley,  Bx  parte,  L96. 

rd,  [reland,  Hank  of,  v.  328. 
Berkeley,  Scott  < 
Bernard  -,  569,  570. 


TABLE    OF    CASES    CITED. 


Bernard,  Coggs  v.  10. 
Bertram,  Ness  v.  483,  503. 
Berwick,  Hankey  v.  108. 
Bescoby  v.  Pack,  353. 
Bevan  v.  Hill,  91. 
v.  Nunn,  85. 


— ,  Pott  v.  41. 


Biddulph,  Ex  parte,  317. 

Bigg,  Re,  374. 

Bignold,  Ex  parte,  17,  18,  19,  198. 

Billing  v.  Devaux,  50,  95. 

■  v.  Ries,  57. 

Binney,  Holmes  v.  469. 
Birch  v.  Corbyn,  367. 

v.  Ellames,  198. 

,  Harris  v.  213. 

Bird  v.  Bass,  380. 

,  Ex  parte,  394. 

,  Fayle  v.  105. 

Birdwood,  Raphael  v.  324. 
Birkbeck,  Roper  v.  112. 
Birkett,  Ex  parte.  88. 
Birkett,  R.  v.  357. 
Bishop  v.  Chitty,  93. 

,  Church  v.  111. 

,  Grave  v.  315. 

v.  Jersey,  Countess  of,  297. 

,  Rufford  v.  397. 

Bittleston  v.  Cooke,  315,  594. 
Blackburn,  Shiells  v.  10. 
Blackett,  Ridley  v.  90. 
Blackstone,  Foster  v.  209. 
Blagden,  Ex  parte,  122. 
Blair  v.  Bromley,  16. 

v.  Ormond,  357. 

Blake  v.  Beaumont,  105. 

v.  White,  232. 

Blakeley,  Ex  parte,  567. 
Blakelock,  Stevenson  v.  290. 
Bland,  Ex  parte,  594. 

v.  Layfield,  294. 

Bleakley  v.  Smith,  39. 

Bleasby  v.  Crossley,  83. 

Blew  v.  "Wyatt,  130. 

Blurton,  Kirk  v.  45. 

Boardman  v.  Jackson,  608. 

Boddington  v.  Castelli,  214,  215.  218. 

v.  Schlenker,  50,  51,  52. 

Bodenham  v.  Hoskyns,  125. 

v.  Purchas,  75,  221,  279. 

Boehm  v.  Sterling,  32,  53,  62,  97. 
Boggs  v.  Morgan,  2. 
Boldero,  Lushington  v.  323. 
Bolingbroke's,  Lord,  Case,  289. 
Bolland  v.  Bygrave,  290. 

,  Dougan  v.  342. 

,  Ex  parte,  121. 

,  Frost  v.  342. 

,  Hume  v.  358. 

Bolton  v.  Puller,  139,  154,  160,  290. 
Bonar  v.  Macdonald,  226,  272. 

v.  Mitchell,  435,  463,  464. 

Bond,  Clough  v.  40,  375. 
,  Ex  parte,  154,  167. 


Bond  v.  Gibson,  27. 

,  Sims  v.  46. 

v.  Warden,  15,  17,  53. 

Bonser  v.  Cox,  240,  241. 

Booth  v.  England,  Bank  of,  440. 

,  England,  Bank  of  v.  459. 

Bopart  v.  Hicks,  15. 
Borrodaile  v.  Middleton,  14. 
Bosanquet  v.  Corser,  267. 

v.  Dudman,  290. 

,  Ex  parte,  214,  294. 

,  Ransford  v.  483. 

v.  Shortridge,  463,  464,  465, 

466,  485,  498,  546. 

v.  Woodford,  461,  462,  464, 

479. 

v.  Wray,  479. 

Boswell  v.  Smith,  81. 
Boultbee  v.  Stubbs,  237,  238. 
Bourne,  Hawken  v.  520. 

,  Hawtayne  v.  520. 

Bouser  v.  Colby,  197. 
Bouverie,  Vernon  v.  29. 
Bowden,  Ex  parte,  240. 
Bower,  Davidson  v.  470,  471. 
Bowes,  Dickenson  v.  413. 

v.  Howe,  407. 

,  Howe  v.  413. 

,  Saunderson  v.  413. 

Bowhay,  Ricketts  v.  480,  482,  500,  503. 

Bowles  v.  Orr,  4. 

Bowness,  Ex  parte,  88. 

Bowsher,  Davis  v.  288. 

Boycott,  Manley  v.  77,  257. 

Boyd  v.  Emmerson,  60. 

Boydell  v.  Harkness,  106,  108. 

Boylston,  Langston  v.  150. 

Bozon  v.  Williams,  194. 

Bradbury  v.  Anderton,  7. 

Bradley  v.  Bardsley,  98. 

,  Chalmers  v.  607. 

v.  Eyre,  504. 

,  Mason  v.  113. 

v.  Urquhart,  504. 

v.  Warburg,  500,  503. 

Bradshaw,  Ex  parte,  368. 

,  O'Connor  v.  580. 

Braithwaite,  Shelton  v.  108. 

Brandao  v.  Barnett,  11,   168,  283,  284, 

289,  520. 
Brander  v.  Brander,  376. 
Brasier  v.  Hudson,  190. 
Breed  v.  Green,  136. 
Breillat,  Australasia,    Bank   of  v.    11, 

525,  526,  538. 
Brembridge,  Evans  v.  231. 
Brenchley,  Ex  parte,  523. 
Breton  v.  Cope,  359. 
Brettel  v.  Davis,  613. 

v.  Williams,  294. 

Brettell,  Clowes  v.  500. 

,  Johnson  v.  500. 

Bretton  v.  Barnett,  5. 
Brice  v.  Stokes,  349,  36b. 


XIV 


GRANT  ON  THE  LAW  OF  BANKING. 


Bright  v.  Button,  566. 
:  v.  Hampshire,  1  Lg. 

Brine  v.  Ferrier,  103. 

Brinley,  Jones  v.  353. 

.  K.ul  of.  v.  Wilsinore,  93. 
Bri-'  Mian,  11. 

British  Insarance  Comp.,  Walker  v.  266. 
BroadhurM,  Jones  v.  67,  175. 
Broadwuo'i.  Ex  parte,  196. 
Brocklehurst  v.  Jessop,  198. 
Brogden.  Waters  v.  14. 
Bromley,  Blair  v.  16. 

"v.  Holland,  357. 

Brook,  Crelin  v.  577. 

v.  Stuart.  244. 

v.  Tomer,  405,  406. 

Brooke  v.  Enderby,  225,  281. 
Broughton  v.  Davies,  201. 

,  Jennings  v.  552,  553. 

v.   Manchester   Waterworks 

Co.  457. 
Brown  v.  Anderson,  280. 

v.  Bellasis,  353. 

v.  Davis,  63. 

.  Ex  parte,  107,  169,  314,  547. 

v.  Harraden,  95. 

,  Harrison  v.  472,  550. 

,  Janson  and  others  v.  Thomp- 
son, 339. 

v.  Kewley,  321,  331. 

.  Moule  v.  51. 

Bruce  v.  Bruce,  412. 

,  Gibson  v.  322. 

Bruin,  Metcalfe  v.  263,  265. 
BryBon  v.  Wylie,  142,  170. 
d  in.  Edwards  v.  463. 

.  K.\  parte,  163. 

t.  Findlay,386. 

Buckle  v.  Mitchell,  197. 
Buckley,  Ex  parti 
Buffery,  PreBcott  v.  463,  582. 
Bull  v.  Barker,  38. 
Bullock  v.  Chapman,  583. 
Bulteel  v.  Jarrold,  331. 
Bnrbidge,  Robinson  v.  366. 

ifield,  Alexander  v.  50.  52.  56,  95, 
97. 

v.  Moore,  107.  113. 

Burdiss,  Carr  v.  181. 
Ex  1 


Bnrlin  I  192,  571. 

Bnrmeder  v.  Crofton,  505. 
Burmester  v.  Morris,  343,  599. 

Burn  v.  Burn.  45, 

I  L22. 

.  K.  v.  175. 

Barnes  r.  Peun<  ■  :.  557. 

Burnet,  Armstro 
Barrell,  Bamford  r.  ■-■-'.  326. 
Burtoi  L24,  17'.'. 

,  Bank,  Ex  parte,  163. 



v.  I 


Bushell.  Ex  parte,  429. 
Bosk's  Case,  56  1. 

.  Pickering  v.  519. 

Bntchart  v.  Dresser,  189,  601. 

Batcher,  Sowerby  v.  436. 

Bute,  Marquis  of,  Stuart  v.  2,  405. 

Butler,  Oheetham  v.  19. 

Battery,  Prescott  v.  466. 

Buttress.  Barker  v.  175,  470,  480,  482, 

499,  50S,  550. 
Bygrave,  Bolland  v.  290. 

Caballero  v.  Slater,  254. 
Cadell,  Mace  v.  211. 
Caldecott,  Ex  parte,  286,  302. 

Caldwell  v.  DaWBOn,  186. 
Caliot  v.Walker.  397,  607. 
Calland  V.  Lloyd,  40,  133. 
Calley  v.  Short,  120. 
Calvert  v.  Baker.  114. 

,  Crellin  v.  576. 

,  Gordon  v.  227,  275. 

Cambridge,  University  of,  v.  Baldwin, 

276. 
Camidge  v.  Allenby,  31,  33,   66,  409, 

410,  414. 
Campbell,  Belcher  v.  138,  144,  182. 

,  Joy  v.  289,  349,  368. 

,  Itoche  v.  385,  395,  435,  514. 

Can  v.  Read,  40,  41. 
Caiman,  Smith  v.  521. 
Capper,  Belcher  v.  213. 

,  R.  v.  90. 

Carbis,  Ex  parte,  181. 
Carey.  Bell  v.  338. 
Carlon  v.  Ireland,  74,  391. 
Carpenter,  Kx  parte,  303. 
Carr  v.  Burdiss,  181. 

v.  Carr.  2. 

v.  Shaw,  435. 

Carrick's  <  !ase,  566. 
Carstairs  v.  Bates.  381. 

v.  Stein,  395. 

Carter  v.  Flower,  66. 

,  Low,  v.  35  1. 

.  Reg.  v.  102,  430,  463. 

Carver,  Price  v.  203. 

Carvick  v.  Yickery,  41. 

Oasberd  r,  Att.Gen.,  201. 
Casson,  Shipton  \ .  404. 
Castell,  Kx  parte,  .vj.;. 

Hi,  Boddington  v.  214,  215,  218. 
Castle,  Kx  parte,  211. 
Castleman  \ .  Raj  .  16. 
Challen  \.  Sbippam,  349. 
Chalmers  v.  Bradley  .  1 
Chambers,  Dixon  \ .  L9. 

,  England  Doe  d.  Bank  of,  v. 

433. 

v.  Minchin,  352. 

,  Willct  v.  26. 

Chaplin,  Clarke  \.  130. 
Chapman  i ,  Be*  kinton,  221,  263. 
.  Bullock  v.  583. 


TABLE    OF    CASES    CITED. 


XT 


Chapman  v.  Chapman,  194. 

f  Graham  v.  181. 

v.  Hart,  90,  405. 

v.  Milvain,  471,  472,  478,  G02. 

,  Reg.  v.  270. 

,  Simpson  v.  299. 

v.  Sutton,  254. 

Charlemont,  Earl  of,  Watson  v.  353. 
Charlton,  Baker  v.  300. 

,  Wise  v.  257. 

Chartres's  Case,  564. 
Chase,  Humberstone  v.  364. 
Cheadle  Savings'  Bank,  R.  v.  617. 
Cheetham  v.  Butler,  19. 
Cheltenham  Railw.  Co.  v.  Daniel,  512. 
Cheshire,  Cross  v.  311. 
Chesneau,  D'Arnay  v.  218. 
Chesterfield,  Ld.,  Bentham  v.  94. 
Chettle,  Reynolds  v.  58. 
Child,  Ex  parte,  420. 

,  Walmesley  v.  429. 

Chippendale,  Ex  parte,  313,   343,  520, 

599. 
Chisman,  Sparrow  v.  292. 
Chissum  v.  Dewes,  199. 
Chiswell,  Stephenson  v.  312. 
Chitty,  Bishop  v.  93. 
Cholmeley  v.  Darley,  257,  259. 
Chorlton,  Newton  v.  226. 
Christie,  Ex  parte,  230. 

v.  Peart,  470. 

,  Scotland,  Bank  of,  v.  5,  225, 

281. 

,  Watts  v.  41,  89,  288. 

Church  v.  Bishop,  111. 

,  Doe  d.  v.  Pontifex,  39,  406. 

Churchill,  Fowler  v.  366. 
Clancarty,  Ld.,  v.  Latouche,  397. 
Claridge  v.  Hoare,  268. 
Clark  v.  Adair,  60. 

,  Davis  v.  555. 

,  Fydell  v.  382. 

v.  Newsom,  135. 

,  Reg.  v.  432. 

,  Sands  v.  114,  413. 

Clarke  v.  Chaplin,  130. 

,  Ex  parte,  420. 

,  Jones  v.  227. 

v.  Shee,  405,  425. 

Clarkes,  Re,  230. 

Claxton,  Adams  v.  178,  210,  347. 

Clay,  Porter  v.  46. 

Clayton's  Case,  279,  296,  305. 

v.  Gresham,  376. 

Clements,  Foster  v.  28. 
Clifton,  Fox  v.  591. 
Clode  v.  Bayley,  520. 
Clogg,  Pott  v.  5. 
Close  v.  Close,  252. 
Clough  v.  Bond,  40,  375. 
Clouter,  Ex  parte,  192. 
Clowes  v.  Brettell,  500. 
Clutterbuck,  Heming  v.  102. 
Clutton,  Ex  parte,  172. 

January,  1857. — 3 


Coates,  Partridge  v.  75. 

Cochrane,  Eastern,  &c,  Railw.  Co.  Y- 

263. 

v.  O'Brien,  137. 

,  Vivian  v.  581. 

Cockburn's  Case,  543. 

Cocks,  Craufurd  v.  5,  130,  131,  306. 

Cocks  v.  Masterman,  111. 

,  Vacher  v.  322. 

Coggs  v.  Bernard,  10. 
Colby,  Bouser  v.  197. 
Cole,  Ex  parte,  61. 

,  Kearsley  v.  242,  246. 

Coles  v.  England,  Bank  of,  26,  358,  362. 
Collingridge,  Ellison  v.  117. 
Collins,  Everett  v.  79. 

,  Ex  parte,  42,  324,  370. 

v.  Martin,  153,  154,  203. 

Collinson  v.  Lister,  515,  603. 
Colt  v.  Netterville,  353. 
Colwell,  Banks  v.  63. 
Compton,  Stone  v.  239. 
Congreve,  Douglas  v.  353. 
Connell,  Graham  v.  366,  486,  487. 

,  Hall  v.  473. 

,  M'lntyre  v.  486,  487,  488. 

,  Penkivil  v.  551. 

,  Seddon  v.  475. 

Const  v.  Harris,  44,  512,  597. 
Conwav,  Corlett  v.  59. 

v.  Nail,  88. 

Cooke,  Bittleston  v.  315,  594. 

v.  Seeley,  46,  311. 

,  Simson  v.  226. 

Coombe,  Ex  parte,  200. 
Coombes  v.  Mansfield,  212. 
Cooper,  Bain  v.  244. 

,  Davidson  v.  113,  114,  471. 

,  Tassell  v.  5,  125. 

,  Thomas  v.  397,  398. 

Cope,  Breton  v.  359. 

,  Furness  v.  331. 

Copeland,  Ex  parte,  370. 

,  Ramford  v.  458. 

Copland,  Toulmin  v.  5,  281,  304,  305. 

Corbyn,  Birch  v.  367. 

Corlett  v.  Conway,  59. 

Corney,  Rothschild  v.  62. 

Corral,  Beckwith  v.  427. 

Corser,  Bosanquet  v.  267. 

Coventry,  Evans  v.  585,  586,  590,  591, 

595. 

,  Earl  of,  Sheffield  v.  353. 

Courtier,  Tiley  v.  38.  ' 
Courtoy  v.  Vincent,  92. 
Cox,  Bonser  v.  240,  241. 
Cox,  Godard  v.  279. 

v.  Troy,  66,  112. 

,  Tyson  v.  237. 

Cowell,  Ex  parte,  196. 

v.  Simpson,  290. 

Cowper  v.  Smith,  252. 
Cowrie,  Masterman  v.  395. 
Cramer  v.  Cramer,  369. 


GRANT  ON  THE  LAW  OF  BANKING. 


Crane,  Peat  t.  375. 

Orauford  ,  130,  131,  306. 

i.  Smith  v.  Ill,  309. 

.  Wilson  v.  249,  230,  265,  471. 

Creed  •  ■  17. 

d,  Reg  v.  269. 
Creighton  v.  Rankin,  232,  276. 
Crellin  v.  Brook. 

v.  Calvert, 

131,  133,  511. 
Crickett,  Harvey  v.  401. 
Crisford,  Beales  v.  405. 
Crofton,  Burmeder  v.  505. 
Oroke,  Reg.  v.  430. 
Orooke,  R.  v.  357. 
Crosbie,  Fletcher  v.  470. 

.   Cheshire,  311. 

,  Daniel  v.  130,  304. 

v.  Law,  500. 

CrossneM'.-;  Case,  590. 

v.  Such,  369. 

Crossley,  Bleasby  v.  83. 
Atwood  v.  164. 
Crowe.  Hawse  v.  93. 

her,  R.  v.  430. 

,  Wintle  v.  45. 

Cubitt,  Gill  v.  429. 
Cndworth,  Fox  v.  404. 
Cnllingworth  v.  Lloyd,  243. 
CnlverweU,  Murky  v.  64,  103. 
Cumberlege,  Ware  v.  581. 
Camming  v.  Bailey,  32  L. 

v.  Prescott,  185. 

Cunningham,  Ex  parte,  317. 

Curri  v.  335,  337,  382,  385. 

,  Rothschild  v.  436. 

,  Small  v.  233. 

Curry,  Reg.  v.  102. 

.  395. 
Oust,  Hope  V.  H. 

Dalton,  Ashton  v.  197,  284. 

,  v.  Midland    Counties    Railway 

193. 
i  :.  Lynch  v.  181. 

!  I  i-ii  Railw.  Co.  V.  f)l 'J. 

.  v.  I 

I 

D  CI  olmeley  \ 

eau,  2  18. 
1 1 

tford  Barings'  Hank.  The  620. 

,(•11,  Bmblin  v.  1 14. 
D    3ilva  v.  Fuller,  i  ■ 
l '       iport  v.  Powell, 

l 

v.  231. 

1 )  r.  24. 

1  ;  7 1 . 

I  13,  11  1.  471. 

1  Bi  i 

v .  M  i , 


Davis,  Broughton  v.  201. 

,  Brown  v.  63. 

,  Macclesfield,  Earl  of  v.  284. 

,  Gough  v.  130,  305,  359. 

l»a\  is  v.  Bowsher,  288. 
,  Brettel  v.  613. 

^— —  v    Oliirlc   555 

v.  England,  Bank  of,  125,  359,  362, 

371,  376. 

,  England,  Bank  of,  v.  363. 

,  Husband  v.  41,  42. 

,  Pearce  v.  83. 

v.  Spurling,  351. 

Davison,  Kx  parte,  407. 

v.  Farmer,  475,  506. 

Dawson,  Caldwell  v.  186. 

v.  Lawes,  238. 

Day.  Hulkes  v.  366. 
Deacon  v.  Stodhart,  111. 

,  Williams  v.  8. 

Dean  v.  James,  179. 

Dearie  v.  Hall,  3. 

Dc  Bergareche  v.  Pullin,  108. 

De  Bernales  v.  Fuller,  60,  110,  113. 

De  Bouchont  v.  Goldsmid,  371. 

Decks  v.  Stanhope,  550,  551. 

Deffell,  Pennell  v.  5,  281,  347. 

Dehors  v.  Harriott,  63. 

De  la  Chaumette  v.  England,  Bank  of, 

406. 
Delawar,  Ex  parte,  420. 
Demainbray  v.  Metcalfe,  210. 
Dc  Moylens,  Joyce  v.  188,  202. 
Denny,  Flory  v.  212,  594. 
Dent,  Muttyloll  Seal  v.  155,  386. 
Derbyshire,  &c,  Railw.  Comp.,  Reg.  v. 

479. 
Derbyshire,  &c,  Railw.  Comp.,  Scrrell 

v.  32,  40,  48. 
Derham,  Fearenside  v.  310. 
Dessborough  v.  Harris,  186,   187,  218, 

219. 
De  TaBtet  V.  Baring,  435. 
Devaux,  Billing  v.  50,  95. 
Deraynea  v.  Noble,  279,  607. 
Devereux  v.  Kilkenny,  &c,  Railway  Co. 

r 

Devisme,  Nightingale  v.  353. 

Chi    am  v.  1 99. 
Diamond,  Nicholla  v. 
Dickenson  v.  Boti  es,  1 13. 

Dirk  120. 

Digby,  Howard  \ 

,  Johnson  v.  3 

i  implin  v.  331. 
DU worth,  Kidson  \.  .''.48. 
a  \ .  Chambers,  1 9. 

126. 

Dobbins,  Taylor 
Dobell  v.  Btevens,  352. 
Dobinson,  Es  parte,  3  12, 
lell  \.  93. 
■     190, 
on  V.  Bell,  483,  492. 


TABLE    OF    CASES    CITED. 


XVll 


Dodgson  Case,  548,  566,  571. 
v.  Scott,  499,  501,  502,  504, 

505,  506. 
Dodwell,  Turney  v.  82. 
Doidge,  Melville  v.  266. 
Dominy,  Thompson  v.  190. 
Dorchester,  Ld.,  v.  Effingham,  Earl  of, 

346. 
Dorrien,  Kerrison  v.  197. 

Lucas  v.  190,  194,  284. 

Dotterill,  Gordon  v.  353. 
Dougan  v.  Bolland,  342. 
Douglas,  Abbot  v.  19,  91,  406. 

v.  Congreve,  353. 

,  Ex  parte,  169. 

Douglas  v.  Russell,  214. 
Dowdall,  Hallett  v.  597. 
Dowan  v.  Hailing,  62,  429. 
Downes,  Ld.,  Lindsay  v.  275. 
Drake,  Rogers  v.  19. 
Draper,  Rastell  v.  23. 
Dresser,  Butchart  v.  189,  601. 
Drever  v.  Mandesley,  352. 
Driver  v.  Burton,  45. 
Dry  v.  Davey,  221,  264. 

,  Sheppard  v.  45. 

Dryden  v.  Frost,  198. 
Duck,  Ramsbottom  v.  403. 
Dudman,  Bosanquet  v.  290. 
Dufaur  v.  Oxenden,  59. 
Duff  v.  East  India  Comp.,  46. 
Duhamel,  Steadman  v.  17. 
Dumas,  Ex  parte,  608. 
Duncoft  v.  Albrecht,  371,  491. 
Dundas,  Allen  v.  40. 
Dunn,  Steward  v.  462,  464,  474. 
Dunston,  Perring  v.  440,  457,  459. 
Dupuy  v.  Truman,  608. 

Eade,  Stoveld  v.  280. 
Earle,  Evans  v.  272. 

v.  Oliver,  221. 

Early,  "Warrington  v.  114. 

East  v. ,  19. 

East  India  Co.,  Duff  v.  46. 

,  Gordon  v.  179. 

East  of  England   Banking  Co.'s  Case, 

574. 
Eastern  &c.  Railw.  Co.  v.  Cochrane,  263. 
Eastman,  Bristow  v.  41. 
Eaton  v.  Bell,  341. 
Ede  v.  Knowles,  199. 
Eden,  Roberts  v.  206. 

,  Selby  v.  105. 

Edge  v.  Worthington,  200. 
Edmonds,  Fenn  v.  219. 
Edmundson,  Allen  v.  106. 
Edwards,  Baillie  v.  335. 

v.  Buchanan,  463. 

,  Ex  parte,  166,  389. 

,  Frank  v.  272. 

v.  Hall,  490. 

v.  Jevons,  254. 

v.  Newman,  418. 


Edwards  v.  Scott,  181. 

v.  Vere,  129. 

Effingham,  Earl  of  Dorchester,  Lord,  v. 

346. 
Eggington,  Simpson  v.  Ill,  508. 
Ekins,  Maclish  v.  203. 
Eliason,  Parke  v.  170,  330. 
Ellames,  Birch  v.  198. 
Ellis,  Eyles  v.  120. 

v.  Griffith,  477. 

Ellison  v.  Collingridge,  117. 
Elworthy,  Teed  v.  296. 
Emblin  v.  Dartnell,  114. 
Emery  v.  Richards,  119. 
Emly  v.  Lye,  308. 
Emmerson,  Boyd  v.  60. 
Enderby,  Brooke  v.  225,  281. 
England,  Bank  of,  Ancher  v.  391. 

v.  Anderson,  5,  6,  439, 

457,  459. 

,  Benjamin  v.  424. 

v.  Booth,  440,  459. 

,  Doe  d.  Bank  of,  v.  Chambers, 

433. 

,  Bank  of,  Coles  v.  26,  358,  362. 

,  Davis  v.  125,  359,  362,  371, 

376. 

*  De  la  Chaumette  v.  406. 

,  Ex  parte,  379,  421. 

,  Foster  v.  356,  359. 

,  Franklin  v.  360. 

,  Green  v.  371. 

,  Hartga  v.  363. 

,  Heslop  v.  359. 

v.  Johnson,  501,  503. 

,  Governor  &c.  of  Bank   of,   v. 

Newman,  382. 

,  Bank  of,  v.  Parsons,  363,  364. 

,  Partridge  v.  33,  361,  406. 

,  R.  v.  362. 

,  Raphael  v.  424,  425,  429. 

,  Richardson  v.  304,  550. 

,  Sloman  v.  42,  128,  354,  358. 

,  Solomons  v.  423. 

,  Stracy  v.  358. 

,  Sutton  v.  362. 

,  Whitaker  v.  49,  106  378. 

,  Willis  v.   88,  432,  433,  458, 

584. 
Esdaile  v.  Maclean,  470. 

v.  Smith,  500,  505. 

v.  Trustwell,  500. 

Evans  v.  Brembridge,  231. 

v.  Coventry,   585,  586,  590,  591. 

595. 

v.  Earle,  272. 

,  Reg.  v.  269,  514,  602. 

Trustees,  Ireland,  Bank  of  v.  373. 

Ward  v.  36,  409. 

v.  Whyte,  410. 

Everard  v.  Watson,  106. 
Everett  v.  Collins,  79. 

,  Williams  v.  7,  11,  116,  118. 

Exon  v.  Russell,  114. 


XV111 


GRANT    ON    THE    LAW    OF    BANKING. 


Ki  parte  Alexander,  198. 

Appach,  345. 

Arkwright,  179,  180. 

Armitstead,  151, 

- —  re  Dilworth,  141. 


Armstrong,  17:». 

Atkins,  139,  152,  169. 

Atkinson,  314. 

Baine,  288. 

Baldwin,  333. 

Banks. 

Barclay,  192, 

Barnett,  179,  182,  20G,  207. 

Barwif 

Bebb, 

Belcher.  317. 

Bennett,  543,  557,  559,  577,  587. 

Benson,  151. 

Bentley,  196. 

Beresford,  541. 

Biddulph,  317. 

Bignold,  17,  18,  19,  198. 

Bird,  394. 
•  Birkett,  88. 
.  Blagden,  122. 

■  Blakeley,  567. 
.  Bland,  594. 

■  Bolland,  121. 

■  Bond,  154,  167. 
-Bosanquet,  214,  294. 

-  Bowden,  240. 

-  Bowness,  88. 

-  Bradshaw,  368. 

-  Brenchley,  523. 

-  Broadwood,  100. 

-  Brown,  167,  169,  314,  547. 

-  Buchanan,  163. 

-  Buckley,  45. 

-  Burdiss,  193. 

-  Burton,  124.  179. 
Bank,  163. 


Bushcll,  429. 
Caldecott,  286,  302. 
Carbis,  181. 

ater,  303. 
Castell, 
Castle,  211. 

■  ChUd 

■  Chippendale,  313, 343,  520,599. 

■  Christie,  230. 

-  Clark 

-  Clouti  r,  i 

-  Clatton,  17^. 
I 

61. 

-  Coll.' 

Cop< 

■  1  7. 

;'>7. 
120. 

-  Dobii 


Ex  parte  Dobson,  190. 

Douglas,  169. 

Dumas,  152. 

Edwards,  166,  389. 

England,  Hank  of,  379,  421. 

I 

Parley,  204. 

Field,  355. 

Fleet,  620. 

Fletcher,  198. 

Ford,  192. 

Frere,  386. 

Froggatt,  161. 

Gawan,  195. 

Gifford,  231. 

Gillett,  192,  37.".. 

Glyn,  203. 

Gordon,  420. 

Gouthwaite,  456,  561,  562. 

Graham,  327. 

Gwyn,  395. 

Hall,  314,  468,  485,  566,  568. 

Hallifax,  194,  421. 

Hanson,  310. 

Hardy,  199. 

Harris,  321,  344,  620. 

Harrison,  185. 

Harvey,  252. 

Hawthorne,  470. 

Ilaynes,  620. 

Henderson,  547. 

nenessey,  181,  183,  210. 

Hernaman,  329. 

Hilliard.  348. 

Hippins,  319. 

Hobhouse,  383. 

Holland,  374. 

Holmes,  164,  332. 

Hooper,  200. 

Hope,  228. 

Hornby,  326,  332. 

Hunt,  "199. 

Hunter,  42. 

Imeson,  407. 

Johnson,  330. 

Jones,  328. 

Kelsall,  216. 

Kensington,  217. 

Keys,  420. 

Lacey,  378. 

Lacon,  191. 

Lancaster  Canal  Co.  1S5,  346. 

I.  200. 

Latta,  610. 

Lavell.  375. 

Law, 

Leal.  312. 

Leeds  Bank,  154,  289. 

Lewis,  314. 

Littledale, 

Littlejohn,  255. 

Lloyd,  195. 

M  Qai 

M'Turrk.  206,  207. 


TABLE    OF    CASES    CITED. 


5x  parte  Majoribanks,  181,  211. 

Mansfield,  Earl  of,  561. 

Martin,  193,  374,  379. 

Masterman,  185. 

Matheson,  370. 

Mayer,  300. 

Miles,  228. 

Michell,  91. 

Mitchell,  19,  315. 

Morgan,  192. 

Ness,  479. 

Nettleship,  200. 

Nicholas,  506. 

Nunn,  183. 

Nutting,  185. 

Oakes,  217. 

Orford,  321,  344. 

Osborne,  179. 

Oursell,  139. 

Patch,  184. 

Pauli,  156. 

Pearce,  343. 

Pease,  152,  154,  155,  162,  289. 

Perry,  192. 

Plant,  186,  287,  494. 

Powell,  193. 

Prescott,  334,  454,  467. 

Price,  182,  188,  195,  207. 

Ram,  375. 

Randleson,  282,  608. 

Ray,  621. 

Richardson,  185,  353. 

Riddell,  345,  621. 

Rigby,  40. 

Roberts,  382. 

Robinson,  402. 

Rodgers,  192. 

Rogers,  420. 

Rowton,  163. 

Rufford,  315. 

Tagart,  192. 

Tanner,  183. 

Taylor,  521,  594. 

Tennyson,  179. 

Thompson  re  Dilworth,  151. 

Toulmin,  281. 

Towgood,  154,  289,  382. 

Tufnell,  200. 

Tyson,  192. 

Salkeld,  499. 

Sandham,  306. 

Sarjeant,  139,  141,  143,  155. 

Scotland,  Bank  of,  380. 

Sharp,  88,  211,  250,  280. 

Sharpe,  326,  327. 

Sillitoe,  522. 

Simpson,  85,  353. 

Skerratt,  317. 

Smith,  168,  181,  191,  192,  200 

217. 

Snape,  326. 

Solomons,  317. 

Sparkes,  172,  323. 

Sparrow,  594. 


Ex  parte  Spencer,  185. 

Staddon,  165,  419. 

Stephens,  122. 

Stevens,  181,  193. 

Steward,  287. 

Stokes,  228. 

Stright,  185. 

Stroud,  523. 

Sturt,  153,  316. 

Vere,  190. 

Waithman,  181. 

Wakefield  Bank,  154,  162,  289. 

Watkins,  181. 

Whipham,  321,  344,  620. 

Whitter,  382. 

Whitworth,  261. 

Wilkinson,  180. 

Williams,  302. 

Williamson,  610. 

Willis,  262. 

Wilson,  196,  310,  314. 

Wood,  180,  183,  506. 

Wylie,  317. 

Wyndham,  314. 

Eyles  v.  Ellis,  120. 
Eyre,  Bradley  v.  504. 

Ex  parte,  123,  284. 

Parrott  v.  342. 

Eyton,  Pott  v.  313. 

Fagan,  Bengal,  Bank  of,  v.  205. 
Fair  v.  M'lver,  335. 
Faircloth  v.  Gurney,  406. 
Fairlie  v.  Freeman,  347. 
Faith  v.  Richmond,  45. 
Fancourtv.  Thorne,  257. 
Farley,  Ex  parte,  204. 
Farmer,  Davison  v.  475,  506. 
Farrow,  Leadbitter  v.  436. 
Farwell,  Harris  v.  318. 
Fauntleroy,  R.  v.  432. 
Fawcett  v.  Fearne,  211. 
Fayle  v.  Bird,  105. 
Fearenside  v.  Derham,  310. 
Fearne,  Fawcett  v.  211. 
Fector  v.  Phillpott,  201. 
Fenn  v.  Edmonds,  219. 

v.  Harrison,  410. 

,  Winch  v.  328,  395. 

Fenton,  Thomas  v.  97. 

,  Trueman  v.  67. 

Fenwick's  Case,  564. 

,  Ness  v.  503. 

,  Scotland,  Bank  of,  v.  500. 

Fernandey  v.  Glynn,  66. 

Fernley,  Stainback  v.  548. 

Fernon,  R.  v.  622. 

Ferrand,  Smith  v.  37,  83,  95. 

Ferrier,  Brine  v.  103. 

Ferris  v.  Mullins,  183. 

Fetch,  Knight  v.  370. 

Field,  Ex  parte,  355. 

v.  Lonsdale,  616. 

v.  Mackenzie,  501,  502,  503,  505. 


r,  RANT    01    THE    LAW    OF    BANKING. 


Field  \     •'• 

■ 

Firth  v.  II 
-,  Shaw  v. 

Kill  h  \ 

•  raid,  Lynch  v.  CI 7. 

Fletcher  r.  I 



, —  v.  Manning 

v.  Walker 

Flint.  B,  v 

Plowi 

.    - 

Foley  v.  Hill.  2,  3 

U,  46,  169,  525. 
Ford. 

▼.  Sheldon,  90. 

-  orterant  v.  G3. 
[bam  v.  Willis,  I 
•    ■ 
i .  I 

t.  Surtees,  418. 

:  v.  Blackstone,  200. 
v.  !  Bank  of,  356,  359. 

:y  v.  94. 

v.  MM. 

,  Strong  v.  261. 

v.  V.  405. 

Fowl  bill,  366. 
.  W 

Fox  i 

rth,  404. 

v.  Frith, 

Prank  r.  I  172. 

klin  r.  England,  Hunk  of,  360. 
,  Hull  r. 

,  B 

F ras or  W.  K'«t  1. 

,  Mather  r. 

y  n  Bman,  9  ilrtie  r.  3  IT. 

,  Willis  v.  331. 

• 

(13. 

Frill 

Vr<  •  )■ 

,  Dryden  i 

Fry,  Bayi  • 

— ,  Stewarl  v.  7.  i  12. 

Prahling  •  lift. 

Puller,  Da  Bflva  i 

, I  -113. 

V      I 

,  Hail  I 

,  Roe  v.  171. 

v.  .Smith,   112,  411. 


Fumcss  v.  Cope,  331. 
.  v.  Clark,  382. 

Gabb,  Matthi 

356. 
209. 

v.  Luttrell,  335. 

Gallini  v.  Noble,  353. 

Gamrc  moll,  104. 

Gandell,  Bodick  v.  27,  50,  83,  96,  116. 

Gardiner,  Bell  r. 

Gardner  v.  Lachlan,  179. 

Garnett  v.  Woodcock,  106. 

Garry  v.  Sharratt,  198. 

Lde,  Thorpi 
Gaskell  v.  GaakeU,  118. 

monda  v.  607. 
Gatrill,  Wickham  v.  268. 
Gangain,  Whitworth  v.  201. 
Gannt  v.  Taylor,  5,  40, 
Gausses  v.  Morton.  357. 

Kx  parte,  196. 
Gay  v.  Lander,  391. 

.  Bowel!  v.  353. 
Gent,  Rhodes  v.  109. 
George.  Tib  bits  v.  83,  181. 

,  Whitmash  v.  267. 

Gibb  v.  Mather,  106. 
GibbinB,  Tinimis  v.  404,  410,  411,  412, 
415. 

n.  Bond  v.  2  7. 

v.  Brace,  322. 

,  Fuller  v 

v.  Minet,  7,  9,  33,  39,   116,  118. 

v.  Mc 

v.  Overbuy,  182,  186,  188. 

,  Pentland  r.  485. 

Gifford,  Kx  parte,  231. 
GilchriBt,  !:■  g.  r.  430. 

,.  Perkins,    141,    143,   152,   153, 
290. 

,  Thompson  v.  139,  141,   147,    152. 

,  Threlfall  v.  170. 

Gill  v.  Cubitt,  429. 
Gillan,  Phene  v. 
Gillard  v.  Wise,  100. 
Gillett,  Kx  parte,  192. 
Gillel    I  (75. 

<  lingell,  Barber  v.  48. 
Gladstone,  Walsh  v.  I 
GlahoL        ■  '7 1. 

431. 
Glyni  122. 

,  Kx  parte,  2 

v.  Il.rt.  I.  i 

,  Bhillibeer  i 

v.  Bell, 

,  Pernandi 

v.  Loeke.  I 

Goddard  r.  Cox,  279. 
Godefroy,  Wilkin 
Golde,  Beg.  \ ,  1 45. 

lid,  De  Boaehont  v.  371. 


TABLE    OF    CASES    CITED. 


Goldsworthy,  Smith  v.  514. 

Goodall,  Barfoot  v.  81. 

Goodbody  v.  Foster,  94. 

Goodman  v.  Harvey,  64. 

Goodwin,  London,  &c,  Railw.  Co.  v. 

263. 
Gordon  v.  Calvert,  227,  275. 

v.  Dotterill,  353. 

,  Ex  parte,  420. 

v.  East  India  Co.,  179. 

,  Parker  v.  49,  104,  106. 

,  R.  v.  359. 

Gough  v.  Davies,  130,  305,  359. 

v.  Findon,  103. 

Goupy  v.  Harden,  436. 
Gouthwate's  Case,  492,  567. 

,  Ex  parte,  456,  561,  562. 

Graham  v.  Chapman,  181. 

v.  Connell,  366,  486,  487. 

,  Ex  parte,  327. 

Grainger  v.  Slingsby,  377,  486. 
Grant,  Ingliss  v.  610. 
,  Re,  548. 

v.  Vaughan,  26,  33,  39,  95. 

Grave  v.  Bishop,  315. 

Gray,  Melland  v.  347,  348. 

,  Ottley  v.  186. 

Greaves,  Steward  v.  462,  470,  508. 
Green,  Breed  v.  136. 

v.  England,  Bank  of,  371. 

,  Samuel  v.  32. 

Greene  v.  Allday,  18. 
Greenshield's  Case,  490. 
Greg,  Moore  v.  197. 
Grellett,  Spinder  v.  114. 
Gresham,  Clayton  v.  376. 
Gressell,  Stokes  v.  16,  99. 
Griffiths,  Ellis  v.  477. 

,  Matthews  v.  387. 

v.  Owen,  50. 

Grigby  v.  Oakes,  406,  408. 
Groom,  Price  v.  194,  212. 
Grote,  Young  v.  25,  372. 
Grove,  R.  v.  270,  622. 
Grover,  Tidmarsh  v.  107. 
Gurney,  Faircloth  v.  406. 

v.  Womersley,  394. 

Guthrie,  Hewison  v.  290. 

Gwatkin  v.  Campbell,  385,  395,  514. 

Gwyn,  Ex  parte,  395. 

Hadow,  Prescott  v.  613. 
Hague  v.  Dandeson,  495. 
Haille  v.  Smith,  215. 
Halifax,  Ex  parte,  194. 
Hall's  Case,  568. 

v.  Connell,  473. 

-,  Dearie  v.  3. 

,  Edwards  v.  490. 

,  Ex  parte,  314,  468,  485,  566,  568. 

v.  Fuller,  26.     ■ 

,  Vernon  v.  331. 

Hallett  v.  Dowdall,  591. 
Hallewell,  Hawker  v.  594,  599. 


Hallifax,  Ex  parte,  421. 
Hailing,  Down  v.  62. 
Halloway,  Rogers  v.  366. 
Halstead  v.  Skelton,  105. 
Hamer,  Armitage  v.  461. 
Hamilton  v.  Watson,  233. 
Hammersley  v.  Knowlys,  390. 

v.  Purling,  89. 

Hammett  v.  Yea,  328,  387,  395. 
Hammon,  R.  v.  269. 
Hammond  v.  Neame,  367. 
Hampshire,  Brind  v.  118. 
Hancom  v.  Allen,  375. 
Hankey  v.  Berwick,  108. 

,  Russell  v.  90. 

,  Vernon  v.  5,  67,  89,  324. 

Hannay,  Abraham  v.  556. 
Hansard  v.  Robinson,  422. 
Hanson,  Ex  parte,  310. 

,  Vernon  v.  68. 

Harden,  Goupy  v.  436. 

Harding,  Australasia,  Bank  of  v.  610. 

Hardy,  Ex  parte,  199. 

v.  Woodroofe,  108. 

Harkness,  Boydell  v.  106,  108. 
Harley,  Trent  Navigation  Co.  v.  231. 
Harman  v.  Fisher,  87. 
Harper,  Mountford  v.  80. 
Harraden,  Brown  v.  95. 
Harries,  In  re,  82. 
Harriott,  Dehors  v.  63. 
Harris  v.  Birch,  213. 

,  Const  v.  44,  512,  597. 

,  Dessborough  v.    186,    187,  218,, 

219. 

,  Ex  parte,  321,  344,  620. 

v.  Farwell,  318. 

,  Firth  v.  503. 

,  Sowerby  v.  91. 

Harrison  v.  Brown,  472,  550. 

,  Ex  parte,  185. 

,  Fenn  v.  410. 

v.  Jackson,  294. 

v.  Masselin,  368. 

v.  Tysan,  500. 

Hart  v.  Alexander,  130,  303. 

,  Chapman  v.  90,  405. 

,  Roche  v.  348. 

,  Rose  v.  334. 

,  Strong  v.  37. 

Hartga  v.  England,  Bank  of,  363. 
Hartop  v.  Hoare,  178. 
Harvey  v.  Crickett,  401. 

,  Ex  parte,  252. 

,  Goodman  v.  64. 

,  R.  v.  358. 

v.  Scott,    462,    466,    501,    503. 

504. 

,  Wing  v.  184. 

Harwood  v.  Law,  483. 
Hatch  v.  Lee,  621. 
Hawken  v.  Bourne,  520. 
Hawker  v.  Hallewell,  594,  599. 
Hawkins  v.  Whitten,  336,  420. 


GRANT  OS  THE  LAW  OF  BANKING. 


I 

H  . 
i 
H 





I 



I 
I 
I  412. 



.  Wilkinson  v.  2 

.10. 

I 

I 
B 

,  |M:ir.|  . 



I 
I 

I 
I 
•'  B'Morine,  I 

I 

105. 

inn,  r. 



% 

» 

I    - 

1 10. 
I' 

H 

I' 

I 



I 

! 

• 

I! 

'  •  I,  42 1. 


Holden,  R.  t.  .'!.r.7,  429,  430. 

■    Sigil,  425. 
Holland,  1'  '■". 



Holloi  224. 

Holme  v.  Barry,  409. 
Holme-  /,  221,  230. 

v.  Binney, 

i 

!32. 

Holroyd  v.  Whitehead,  109. 
Huit,  Lyon  v.  ! 

,  Walworth  \ 

Homan,  Oven  \ 

•    Bi  |>  urte,  200. 
Hope,  Bx  parte,  - 

v.  Oust,  44. 

,  Toung  v.  182. 

Hopkinson  v.  Roe,  360. 
Hop]         I  ill. 

Hornblower  v.  Proud,  lTrt,  330. 
Hornby,  Bx  parte 
Horslej  v.  Hell,  341. 
Horton,  Langton  v.  212. 
Hoskyns,  Bodenham  v.  125. 
Hotbam  v.  Sutton,  353. 
Hongh  \.  May,  82. 

v.  Warr,  22T, 

Hoolditch,  .lames  v.  413. 

,  Marsh  v.  3 

Hoult 

Honaefield,  Parker  v.  197,  198. 

■    ft,  Irvine  \ 

,  Paynter  v.  306. 

Howard  v.  Digby,  607. 

:il. 



How*  107. 

v.  Bon  B8,   1  13. 

Howell,  Bawden  \ 
v.  Gayler, 

v.  Jones,  233. 

Bowtfa  v.  ::i7. 

Hon  orth,  Bamuell  v. 
Hudson.  Archer  \.  206,  2 ;  I 
.  Brai  bi  n  .  1 90. 

Hughes,  Kami  v 

v.  Spooner 

v.  Btnbbe 

,  Taylor  •■  512 

v.  Thorpe, 

1 1  ii  1  k  •     ■.    D 

Hull  v.  Franklin,  I 

Cl 

Burntx  i  tone  i    I 
Humble  *.  Mitchell,  491. 
Hume  v.  Bolland 
Hum  ft 

Hunt.  Bi  parte,  l  99. 
v.  Peacock, 

Hunter.  Bx  parte.  42. 

Hurley,  Reg,  \.  101. 

,  Wedlake  r.  7,  lie. 

Husband  v.  Daries,  41,  42. 


TABLE    OF    CASES    CITED. 


Hutchinson  v.  Hey  worth,  118. 
Hutton,  Bright  v.  566. 

v.  Ward,  94. 

Huxley  v.  O'Connor,  129. 

Imeson,  Ex  parte,  407. 
Ingham,  Simson  v.  279,  280. 
lngliss  v.  Grant,  610. 
Inncs  v.  Stephenson,  41,  326,  349. 
Ireland,  Carlon  v.  74,  391. 

,  Bank  of,  v.  Archer,  32,  383. 

v.  Beresford,  238. 

v.    Evans's    Trustees, 

373. 
Tronside,  Paterson  v.  477. 
Irvine  v.  Houston,  376. 
Isaac,  Mayer  v.  227. 
Iveson,  Other  v.  38,  76,  84,  257. 

Jacaud  v.  French,  313. 
Jackson,  boardman  v.  609. 

,  Harrison  v.  294. 

,  R.  v.  100,  270. 

,  Richardson  v.  38. 

,  Saunderson  v.  39. 

,  Thorpe  v.  76. 

Jadis,  Wilkins  v.  106. 
James,  Dean  v.  179. 

v.  Houlditch,  413. 

,  R.  v.  463. 

v.  Rice,  398. 

Jameson,  Smith  v.  41. 

v.  Swinton,  49. 

Janson  v.  Thomas,  19,  29. 
Jarrold,  Bulteel  v.  231. 
Jefferies,  Watts  v.  92,  366. 
Jenkins  v.  Creech,  17. 
Jennings  v.  Broughton,  552,  553. 
Jersey,  Countess  of,  Bishop  v.  297. 
Jervis,  Moore  v.  251,  284. 
Jessop,  Brocklehurst  v.  198. 
Jevons,  Edwards  v.  254. 
John,  Lewis  v.  203. 
Johnson  v.  Brettell,  500. 

v.  Digby,  353. 

Johnson,  England,  Bank  of  v.  501,  503. 
Ex  parte,  330. 
Reg,  v.  431. 
Spiller  v.  470. 
Williamson  v.  44. 
v.  Windle,  429. 

Johnston,  Mayor,  423. 

,  Reg.  v.  101,  134. 

Johnstone,  Roach  v.  108. 

,  Wilkinson  v.  11. 

Joliffe,  R.  v.  609. 

Jombart  v.  Woollett,  152,  168. 

Jones  v.  Arthur,  38. 

v.  Beach,  77. 

,  Belcher  v.  86. 

v.  Brinley,  353. 

v.  Broadhurst,  67,  175. 

v.  Clarke,  227. 

,  Ex  parte,  328. 


Jones,  Fitch  v.  73. 

,  Howell  v.  233. 

v.  Lewis,  347. 

v.  Mars,  295. 

v.  Maund,  5. 

v.  Powell,  359. 

v.  Ryde,  394,  411. 

,  Seller  v.  226. 

v.  Starkey,  215. 

Jordan  v.  Barlow,  33. 

Whitbread  v.  203. 

Joy  v.  Campbell,  289,  349,  368. 
Joyce  v.  De  Moleyns,  188,  202. 
Judge,  Saunderson  v.  106,  114. 
Julian,  Kitson  v.  273. 

Keable  v.  Payne,  16. 
Keane,  Perry  v.  198. 

v.  Roberts,  351. 

Kearney  v.  King,  23. 
Kearsley  v.  Cole,  242,  246. 
Keating,  Marsh  v.  121,  292,  373. 
Keeves.  Allen  v.  17. 
Keighley,  Alder  v.  386. 
Kelley,  Rogers  v.  267. 
Kelsall,  Ex  parte,  216. 

,  Wallace  v.  42. 

Kemble,  Allen  v.  436. 

v.  Mills,  66,  97. 

Kempe,  Beech  v.  358. 
Kendall  v.  Kendall,  353. 
Kennaway  v.  Treleavan,  274. 
Kensington,  Ex  parte,  217. 
,  Robertson  v.  380. 


Kerrison  v.  Dorrien,  197. 

Kershaw,  Fraser  v.  403. 

Kewley,  Brown  v.  321,  331. 

Key,  Heath  v.  232. 

Keys  v.  Williams,  194. 

Kidson  v.  Dilworth,  348. 

Kilkenny,  &c,  Railw.  Co.,  Devereux  y. 

500. 
Kilsby  v.  Williams,  60. 
King,  Kearney  v.  23. 

,  Sprowle  v.  23. 

v.  Walker,  145. 

Kinnear,  Reg.  v.  517. 

Kirby  v.  Marlborough,  Duke  of,  227. 

Kirk  v.  Bell,  528. 

v.  Blurton,  45. 

Kirton,  Wren  v.  347. 
Kitson  v.  Julian,  273. 
Kleight's  Case,  492. 
Knight  v.  Fetch,  370. 

v.  Plymouth,  Earl  of,  347. 

Knowles,  Ede  v.  199. 
Knowlys,  Hammersley  v.  390. 
Kolm,  Splitgerber  v.  435. 
Kymer  v.  Laurie,  49,  109. 

Lacey,  Ex  parte,  378. 
Lachlan,  Gardner  v.  179. 
Lacon,  Ex  parte,  191. 
Ladbroke,  Rogerson  v.  338,  390. 


XX1\ 


GRANT  ON  THE  LAW  Of  BANKING. 


!  I 

LS. 

i L2. 

. 

i,21l. 

.  1.  v.  397. 

.  Kj  ni.  r  v.  -»•.'.  109. 

•  lldaker  v. 

,  fa  ; 

,  Ham 

,  Needham  « 

v.  Thompson,  515. 

<8. 

.  Dawson  v.  238. 

Park)  r  \.  231. 
i.  Poster  v.  303. 

\.  I. 

V.    1. 

Layfield,  London,  Bank  >>f,  w. 

. !..  Whitfield  v. 
21. 
v.  Lockharl 



.  Sadler  r.  ! 

>,  73,  326. 

.  - 

parte,  154, 

\ .  I' 

,  Gale  v.  184,  209. 

v.  John, 



Lilly  v  II 
Lindgren  v.  Lin 
Llnd 

,  M  7  7. 



Lit  12. 

Littli 

Littlejohn 

Livesey,  Curti 

— '- — .  Callaad  • 
,  Cullingworth  v.  i 

.  I 

.  North   I 

.  :-,  80. 


v.  392,  391. 
-   inley,  39. 
Glynn  v.  136. 
Lockett,  EL  \.  108. 
Lockhart,  I 

..  Probin  v.  57 1. 
10. 
Loe,  Wheatley  v.  10. 

r,  Nuun  v.  499,  505. 
borough,    Lord,    Beardshaw    v. 
013. 
London,   &c   Assurance   Co.,   Hill  v. 

London  Assurance  Company,  Nelson  v. 

London.  Bank  of,  Liu  bod  i 
.  Mayor  of,  Wood  r.  ou3. 

(ioodwin. 

Longman  v.  Pole. 
Lonsdale,  Field  \ 

v.  Martin,  177. 
Low  \    I 

Anderson,  404,  423. 
Lowther,  Hertford  v.  405. 
Loj  d  v.  Freshfield,  3. 

.  Barclay  «  273. 

v.  Dorrien,  190,  194,  284. 

Lnmley  v.  Palmei 

Lund.  Marion  v.  500. 
Lunn  v.  Thornton 
Lnshington  v.  Boldero,  323. 
Lnttrell,  Gale  r. 
I.vall  v.  Biggins,  271. 
Lydall,  Bardwell  v.  ; 

aly  v.  308. 
Lynch  r.  DahseU,  181. 

v.  Fitzgerald,  »;17. 

. .  Haynes, 
— —  v.  Holt,  108. 

ght  v.  Walker,  277,  280. 
■  r.  M'Dow<  11  v.  15. 
Lytb  v.  Ault,  130. 

Macbride  v.  Lindsay,  558,  577. 
M'Callan,  Mortimi 

Macclesfield,  Karl  of,  284. 

M'Cleod,  Bengal,  Bank  of  t.  205,  429. 
Macdonald,  Bonar  r.  226,  272. 
M'Dowall  v.  Lyster,  15,  17. 
lell,  211. 

•  r.  I>a\  id 
M'lntvn-  v.  Oonn<  7.  488. 
v.  Miller,  470,  508. 

\l  Iv.r.  Fair  v.  3 

MR. 

M'Keay,  li.  r.  I 

Mackenzie,  Alexander  \.  516. 

,  Field  v.  501,  508,  503,  505. 

17  4. 

Mackintosh  v.  II  .    108. 

ntherland,  538,540,651,554. 


TABLE    OF    CASES    CITED. 


XXV 


Maclean,  Esdaile  v.  470. 
Maclish  v.  Ekins,  203. 
M'Mahon,  Foster  v.  607. 
M'Morine,  Hibblewhite  v.  190. 
M'Turck,  Ex  parte,  206,  207. 
Majoribanks,  Bellamy  v.  26,  31,  34,  58, 
69,  70. 

,  Ex  parte,  181,  211. 

,  O'Connor  v.  211,  284. 

Malcolm  v.  Scott,  4,  10,  118,  121. 
Manchester  Waterworks  Co.,  Broughton 

v.  457. 
Mandesley,  Drever  v.  352. 
Manesty,  Morris  v.  366. 
Manley  v.  Boycott,  77,  257. 
Manners  v.  Rowley,  471. 
Manning,  Fletcher  v.  84. 

v.  Purchell,  3. 

v.  Westerne,  280. 

Manningford  v.  Toleman,  284. 
Mansfield,  Coombes  v.  212. 

,  Earl  of,  Ex  parte,  561. 

,  Strickland  v.  15. 

March,  Sandilands  v.  294. 
Marchant,  Parker  v.  2,  354. 
Marcus,  Reg.  v.  357. 
Marion  v.  Lund,  500. 
Marlborough,  Dk.  of,  Kirby  v.  227. 
Mars,  Jones  v.  295. 
Marsh  v.  Houlditch,  390. 

v.  Keating,  121,  292,  37*3. 

,  Stone  v.  41,  349. 

,  Truscott  v.  119. 

Marshall,  Forbes  v.  45,  169,  525. 

,  Pinkerton  v.  331. 

Martin,  Collins  v.  154,  154,  203. 

,  Ex  parte,  163,  374,  379. 

,  Lovell  v.  177. 

—  v.  Morgan,  18,  28. 


Martyn,  Dark  v.  350. 
Marzetti  v.  Williams,  5,  49. 
Mason  v.  Barff,  383. 

v.  Bradley,  113. 

,  Hill  v.  2. 

Mason  v.  Pritchard,  227. 
Masselin,  Harrison  v.  368. 
Massey  v.  Banner,  347. 
Masterman,  Cocks  v.  111. 

v.  Cowrie,  395. 

,  Ex  parte,  185. 

,  Stevens  v.  9. 

Masters  v.  Baretto,  114. 
Mather  v.  Fraser,  594. 

,  Gibb  v.  106. 

,  Taylor  v.  63. 

Matheson,  Ex  parte,  370. 
Mathew  v.  Sherwell,  67. 
Matthews  v.  Gabb,  185. 

v.  Griffiths,  387. 

v.  Maude,  377. 

,  Railton  v.  233. 

Maude,  Matthews  v.  377. 
Maund,  Jones  v.  5. 
Mawer's  Case,  573. 


May,  Hough  v.  82. 

,  Robins  v.  257. 

Mayer,  Ex  parte,  300. 

v.  Isaac,  227. 

Mayo's,  Lady,  Case,  363. 
Mayor  v.  Johnson,  423. 
Melland  v.  Gray,  347,  348. 
Mellish  v.  Simeon,  435. 
Melville  v.  Doidge,  266. 
Mercer,  Smith  v.  104,  411. 
Mereweather,  Amory  v.  63. 
Metcalfe  v.  Bruin,  263,  265. 

,  Demainbray  v.  210. 

,  R.  v.  101. 

,  v.  York,  Archbishop  of,  197. 

Meux  v.  Bell,  185,  209. 

Case,  532,  538. 

Mitchell,  Ex  parte,  91. 
Middleton  v.  Barned,  382. 

,  Borrodaile  v.  14. 

,  Parsons  v.  20,  116,  117. 

Midland  Counties  Railw.,  Dalton  v.  369, 

493. 
Mildenhall,  R.  v.  617. 
Miles.  Ex  parte,  228. 
Milford  v.  Milford,  306. 
Miller,  M'Intyre  v.  470,  508. 

v.  Miller,  93. 

v.  Race,  33,  423,  424,  429. 

Reg.  v.  622. 

v.  Thompson,  517. 

v.  Woods,  198. 

Mills  v.  Alderbury  Union,  276. 

v.  Bennett,  325,  354. 

,  Kemble  v.  66,  97. 

,  Leftley  v.  65. 

v.  Oddy,  32,  83. 

Milvain,  Chapman  v.  471,  472,  478,  602. 
Minchin,  Chambers  v.  352. 
Minet,  Gibson  v.  7,  9,  33,  39,  116,  118. 
Mitchell,  Bonar  v.  435,  463,  464. 

,  Buckle  v.  197. 

,  Ex  parte,  19,  315. 

,  Humble  v.  491. 

,  Norman  v.  553,  554. 

Moffat,  R.  v.  857. 
Molineux,  Neale  v.  184. 
Moore  v.  Barthrup,  32,  81,  89. 

,  Burchfield  v.  107,  113. 

v.  Greg,  197. 

v.  Jervis,  251,  284. 

v.  Moore,  90. 

v.  Warren,  409. 

,  Wilson  v.  371. 

Morgan,  Boggs  v.  2. 

Case,  597,  598. 

,  Ex  parte,  192. 

,  Martin  v.  18,  28. 

Morley  v.  Culverwell,  64,  103. 
Morrell,  Ball  v.  48. 
Morris,  Burn  v.  422. 

,  Hewett  v.  435. 

v.  Manesty,  366. 

v.  Wall,  406. 


XXVI 


CHANT    OH     Till;     I.  W,     OF    BANKING. 


M 

- 1  J. 
\    Brown,  51. 
Ilonntford  v.  Harper,  80. 

Mullin- 
Murr.iv  r.  Pi 

v.  Pinker 

,  RumbaU  i 

Murrow  v.  Stoart, 

, 

Mutivlull  Seal  v   . 
r.  Perigall. 

Kail,  I  88. 

,  Price  v.  •}  1 2. 

i,  Hammond  v. 
hi  v.  Lavi 
v.  London  Assurance  Co.,  287. 

■ 

v. 

v.  Bertram, 

.  I 

v.  Penwick, 

rville,  Coll 

Hen  in. in.  Bdwai 

:  Bank 

Of  v 

m,  Clark  i . 

■ 

Parrj  r.  11 
Nigbtij 

Williams  \ 

;ru  ick  v.  ; 

1  D 

,  Galliai  v. 

,  Vulliuniv  v.  124. 



Norili  \     W 

J. 

. V. 

. 

1  13. 

. 

SOS. 


Hatting,  Ex  parte,  185. 
ii\  parte,  '-'IT. 

.  I  !08. 

,  Pemberton  \ 

<  I'Brien,  Cochrane  v.  137. 

.    Bradshaw,  580. 

,  Huxl( 

v.  Majoribanks,  211,  284. 

M 

.  Pollard  v.  107,  335,  389. 



Oldaker  v.  Lavender,  : 

(•liver,  Hark-  v.  2 

,  Polglass  v.  29,  406. 

,  R.  v.  431. 

,  Robson  v.  31,  66,  414 

Orford,  Ej  parte,  321, 

<  Irmond,  Blair  v. 

<  Irr,  \'"'\\  Lea  v.  4. 

<  >sborne,  Bx  parte,  1 19. 

Other  v.  [vi  6,  84,  257. 

Ottley  v.  Gray,  186. 
Ourscll.  Kx  parte,  139. 

urv.  Gribson  v.  182,  186,  188. 
( Iwen,  (Jrillitlis  v.  50. 
v.  Horaan,  233,  243. 

<  Izenden,  Dnfanr  v.  59. 

Oxford  Railw.  Co.,  V7ard,  Lord  v.  15. 
,  Woodcock  v.  226. 

Tack,  Beacoby  v.  353. 

584. 
Palmer  v.  B 

,  Lomley  i 

,  II.  v.  100,  430. 

I'anncll  r.  Woodroffe,  114. 
1'ark  v.  Eliason,  170,  330. 
Parker  v.  A.de,  108. 

,  Hark,  r  v.  264. 

,  Bull  v.  38. 

v.  Gordon,  49,  104,  106. 

v.  Honsefield,  197,  198. 

v.  Lawrence,  231. 

v.  Merchant,  2 

v.  Bmith, 

,  Sparling  v.  497. 

v.  Watson,  231,  235. 

v.  \\ 

v.  Paris,  376. 
Parrott  v.  Byre,  342. 
I'. urv.  Benson  \ . 

v.  Nicholson,  1 13. 

Bi  Ichi  i  \ .  347. 

,  England  v.  363,  364. 

v.  Hiddleton,  20,  1 16,  117. 
Partridge  \ ,  Coat 
v".  Bank  of.  33,  361. 

Patch,  Ei  part  .  184. 
I'. iti  rson  v.  ironside,  177. 
I'.iuli.  Bi  parte,  i  56. 
Payne,  Burton  v.  75. 
Payne  v.  Ceable,  16. 


TABLE    OP    CASES    CITED. 


XXVH 


Paynter  v.  Houston,  306. 
Peach,  In  re,  82. 
Peacock  v.  Hunt,  374. 

,  Snow  v.  64,  427. 

Pearce  v.  Creswick,  131,  133,  511. 

v.  Davis,  83. 

,  Ex  parte,  343. 

Peart,  Christie  v.  470. 

Pease,  Ex  parte,  152,  154,  155,  162,  289. 

v.  Hirst,  77,  216. 

Peat  v.  Crane,  375. 
Pedder  v.  Watts,  120. 
Peel  v.  Tatlock,  271. 
Pemberton  v.  Oakes,  221,  225. 
Pendlebury  v.  Walker,  243. 
Penkivell  v.  Connell,  551. 
Pennell,  Burnes  v.  466,  557,  552. 

v.  Deffel,  5,  281,  347. 

Pentland  v.  Gibson,  485. 

Perfect  v.  Musgrave,  236. 

Perigall,  Myers  v.  490,  496. 

Perkins,  Giles  v.  141,  143,  152,  153,  290. 

Perring  v.  Dunston,  440,  457,  459. 

Perry,  Ex  parte,  192. 

v.  Keane,  198. 

,  Reg.  v.  19. 

Phene  v.  Gillan,  494. 
Phillipson  v.  Tempest,  504. 
Phillpot,  Fector  v.  201. 
Phipps  v.  Tanner,  25. 
Pickard  v.  Bankes,  404. 
Pickering  v.  Busk,  519. 
Piukett,  Murray  v.  496. 
Picton,  Shaw  v.  608. 
Pierson  v.  Pounteys,  23. 
Pinkerton  v.  Marshall,  331. 
Pinkett,  Murray  v.  285,  286. 

v.  Wright,  28'",  544. 

Pinnel's  Case,  279. 

Pinto  v.  Santos,  118. 

Piper,  Sanderson  v.  24. 

Plant,  Ex  parte,  186,  287,  496. 

Plasket,  Willis,  353. 

Plummer,  Re,  240. 

Plymouth,  Earl  of,  Kuight  v.  347. 

Pocklington  v.  Sylvester,  50,  51. 

Pole  and  Co.,  Longman  v.  293. 

Pole,  Wookey  v.  203. 

Polglass  v.  Oliver,  29,  406. 

Pollard  v.  Hemes,  434. 

v.  Ogden,  107,  335,  389. 

Pollman,  R.  v.  128. 

Pond  v.  Underwood,  40. 

Pontifex,  Church,  Doe  d.,  v.  39,  406. 

Pooley,  Rex  v.  14. 

Popham  v.  Aylesbury,  Lady,  405,  406. 

Porcher,  Scott  v.  116,  118. 

Porter,  Bailey  v.  105,  106. 

v.  Clay,  46. 

,  Watts  v.  3,  201. 

Pothecary,  Simpkin  v.  66. 
Pott  v.  Beavan,  328. 

v.  Bevan,  41. 

v.  Clegg,  5. 


Pott  v.  Eyton,  313. 
Poulson,  Watson  v.  32,  53,  55. 
Poulton,  Watson  v.  18. 
Pounteys,  Pierson  v.  23. 
Powell,  Davenport  v.  359. 

,  Ex  parte,  193. 

,  Jones  v.  359. 

,  Russell  v.  116. 

Powles  v.  Page,  313,  525,  584. 
Pratt,  Sutherland  v.  213. 
Prendergrass,  Davey  v.  231. 
Prescott  v.  Buffery,  463,  466,  582. 

,  Cumming  v.  185. 

,  Ex  parte,  334,  454,  467. 

v.  Hadow,  613. 

v.  Tyler,  192. 

Price  v.  Barker,  233,  242,  252. 

v.  Carver,  203. 

,  Ex  parte,  182,  188,  207. 

v.  Groom,  194,  195,  212. 

v.  Neale,  412. 

,  Wynne  v.  494. 

Pritchard,  Mason  v.  227. 

,  Re,  182. 

Probin  v.  Locock,  474. 

Prosser  v.  Rowe,  609. 

Proud,  Hornblower  v.  170,  330. 

Puller,  Bolton  v.  139,  154,  160,  290. 

Pullin,  De  Bergareche  v.  108. 

Pulsford  v.  Richards,  553. 

Purchas,  Bodenham  v.  75,  221,  279. 

Purchell,  Manning  v.  3. 

Purling,  Hammersly  v.  89. 

Purr,  Wheatley  v.  134. 

Putting  v.  Tucker,  358. 

Pyne,  Levy  v.  48. 

Raby,  Sewell  v.  118. 

Race,  Miller  v.  33,  423,  424. 

Raikes,  Re,  183. 

v.  Todd,  253. 

,  Wynne  v.  383. 

Railton  v.  Matthews,  233. 

Ram,  Ex  parte,  375. 

Ramford  v.  Copeland,  458. 

Ramsay,  Mackersy  v.  174. 

Ramsbottom  v.  Duck,  403. 

,  Scholey  v.  64. 

,  Tunson  v.  210. 

Randleson,  Ex  parte,  282,  608. 

Rankin,  Creightdn  v.  232,  275. 

Rann  v.  Hughes,  32. 

Ransford  v.  Bosanquet,  483. 

Raper  v.  Birkbeck,  112. 

Raphael  v.  Birdwood,  324. 

v.  England,  Bank  of.  409,  424, 

425,  429. 

Rastell  v.  Draper,  23. 

Ravenscroft,  R.  v.  102. 

Rawlinson,  Williams  v.  221,  280. 

Ray,  Castleman  v.  16. 

,  Ex  parte,  621. 

Re  Australia,  Royal  Bank  of,  (Cock- 
burn's  Case,)  543. 


xxvni 


GRANT    ON    THE    LAW    OF    BANKING. 


Bank  of,  ( l: 

:0. 



C  Ml. 

,   (Walker's 

541. 

tlT. 

—  B 

una.  Union  Bank  of 

—  Grant, 

l».i\  icon's 

mi  Banking  Co 

(Bernard's  • 

i !  ■  ■  571. 

(Glaholmi     I  574. 

(Hall'-  I 

(Hawthorn*     I  '■C3. 

rHolm<       I  573. 

(Sai.  571. 

(Strati 

—  Norwich  Xai  <;13. 

—  ]•■ 

—  Plnmmer, 

—  Pril 

il  British  Bank. 

—  Bl 

-x<  51,  COO. 



—  .v- 

—  v . 

—  W.irvvi.  k,  fa.  K.iilu  .  I 

1  II. 

v.  Berringt 

Wright  v.   • 

2C8,  C02. 
v.  Beaman, 



v.  Chaj 

v.  Clark,  ■■ 

I 



v.  Curry,  l 

\ 

\ 

v.  I 

I  II. 

\.  Qolde,  I 

V       II 

■.  ;  1 1 1 . 

\ 

« 

I 


Reid 
R 


-  v 

V 

V 


V. 

V. 

V. 

V. 


-  V. 

V. 

V. 


v.  Kiiincar,  517. 
,    Li  •■.  430. 

us,  357. 

v.  M 

v.  Perry,  L9. 
\.  Rodway,  431. 

v.  Smith.  430. 
v.  Bnelling,  13. 

22. 

v.  Taylor,  102. 

v.  Thorn,  I 

v.  Thurborn 

v.  Tnrborville,  102. 

v.  Tnrpin,  L02. 

v.  Vivian,  430. 

v.  Watts,  19,  75,  78. 

v.  Welch,  430. 

v.  Whitmarsh,  580. 

v.  Williams,  101. 

v.  \\  ilson,  55  l. 
..  185. 
,  Abraham, 
.  Bazeley,  2G8. 
,  Birkett,  357. 
,  Burn,  175. 
.  Capper,  90, 

Cheadle  Savings'  Bank,  G17. 
.  Crooki 

.  Crowther,  430. 
.  England,  Bank  of,  302. 
,  Pauntleroy, 
,  Fernon,  622. 
.  Flint, 

l 

on,  359. 
I 
Hammon,  - 

Hodg 

Bolden,  357,  429,  430. 

Jackson,  100. 

163. 
Joliffe,  609. 
Lambton,  I 

t,  102. 

Ife,  101. 
Mildenhall,  617. 
Moffat, 
Oliver,  431. 
Palmer, 

LOO. 
Pollman,  i 

ii. 

roft,  102. 
Sbephi  rd,  102,  358. 

•    131. 
Story, 
Sullen- 

Button 


TABLE    OF    CASES    CITED. 


XXIX 


R.  v.  Wait,  357. 

—  v.  Waite,  268. 

—  v.  Wall,  357. 

—  v.  Walsh,  101,  431. 

—  v.  White,  145. 

—  v.  Willoughby,  102. 

—  v.  Wylie,  430. 

—  v.  Yates,  19,  100. 
Reynell  v.  Spry,  552. 
Reynolds  v.  Chettle,  58. 

,  Vaisey  v.  2. 

Rhodes  v.  Gent,  109. 
Rice,  James  v.  398. 
Rich,  Uther  v.  64. 
Richards,  Emery  v.  119. 

v.  Heather,  295. 

,  Pulsford  v.  553. 

Richardson  v.  England,  Bank  of,  304, 

550. 

,  Ex  parte,  185,  353. 

v.  Jackson,  38. 

Richmond,  Faith  v.  45. 

Rickett  v.  Bennett,  311. 

Ricketts  v.  Bowkay,  480,  482,  500,  503. 

Riddell,  Ex  parte,  345,  621. 

Ridge,  Ruckford  v.  56. 

Ridley  v.  Blackett,  90. 

Ries,  Billing  v.  577 

Rigby,  Ex  parte,  40. 

Roach  v.  Johnston,  108. 

Robarts,  Keane  v.  351. 

v.  Tucker,  26,  58,  110. 

Roberts,  Barry  v.  10. 

v.  Eden,  206. 

,  Ex  parte,  382. 

Robertson  v.  Kensington,  380. 

v.  Sheward,  469,  517. 

Robey  v.  Howard,  311,  608. 
Robins  v.  May,  257. 
Robinson  v.  Burbidge,  366. 

,  Ex  parte,  402. 

,  Hansard  v.  422. 

v.  Hawksford,  50. 

v.  Hawksworth,  96. 

v.  Ward,  348. 

v.  Wood,  366. 

Robley,  Beck  v.  175. 
Robson  v.  Bennett,  51,  58,  59. 

v.  Oliver,  31,  66,  414. 

Rocke  v.  Campbell,  435. 

v.  Hart,  348. 

Rodgers,  Ex  parte,  192. 

Rodickv.  Gandell,  27,  50,  83,  96,  116. 

Rodway,  Reg.  v.  431. 

Roe  v.  Fuller,  471. 

— ,  Hopkinson  v.  360. 

Rogers,  Abbott  v.  580. 

v.  Drake,  19. 

,  Ex  parte,  420. 

v.  Halloway,  366. 

v.  Kelly,  267. 

v.  Langford,  409,  412. 

,  Spurraway  v.  29. 

v.  Thomas,  353. 


Rogers,  Warwick  v.  58,  75,  83,  96,  107, 

113,  382. 
Rogerson  v.  Ladbroko,  338,  390. 
Rolin  v.  Steward,  29,  48,  49. 
Rose  v.  Hart,  334. 
Rossi,  Novelli  v.  113. 
Rostron,  Walker  v.  7,  9,  116,  117,  118. 
Rothschild  v.  Corney,  62. 

v.  Currie,  436. 

,  Hennings  v.  33. 

Rowe,  Prosser  v.  609. 

v.  Young,  104. 

Rowle,  Ryals  v.  196. 

Rowley,  Manners  v.  471. 

Rowth  v.  Howell,  347. 

Rowton,  Ex  parte,  163. 

Royal  British  Bank  v.  TurquancJ  ,599. 

Ruckford  v.  Ridge,  56. 

Ruddock's  Case,  244. 

Rufford  v.  Bishop,  397. 

,  Ex  parte,  315. 

Rumball  v.  Murray,  19. 
Russell,  Douglas  v.  214. 

,  Exon  v.  114. 

v.  Hankey,  90. 

v.  Powell,  116. 

v.  Russell,  194. 

,  Wright  v.  263. 

Ryals  v.  Rowle,  196. 
Ryde,  Jones  v.  394,  411. 

Sadler  v.  Belcher,  171,  172. 

v.  Lee,  292,  351. 

Sadler's  Case,  492,  572. 

Saddlers'  Co.  v.  Badcock,  181. 

Saddler,  Snow  v.  427. 

St.  Alban's  Bank,  Re,  316. 

St.  Marylebone  Banking  Co.,  Re,  551, 

556,  600. 
St.  Quintin,  Walwyn  v.  95. 
Salkeld,  Ex  parte,  499. 
Salway  v.  Salway,  44. 
Samuel,  Badnall  v.  232. 

v.  Green,  32. 

Samuell  v.  Howarth,  232. 
Sanderson  v.  Bowes,  413. 

v.  Piper,  24. 

Sanderson's  Case,  548,  566,  571. 
Sandham,  Ex  parte,  306. 
Sandilands,  Lloyd  v.  80. 

v.  March,  294. 

Sands  v.  Clarke,  114,  413. 

Santos,  Pinto  v.  118. 

Sarjeant,  Ex  parte,  139,  141,  143,  155. 

Saunderson  v,  Jackson,  39. 

v.  Judge,  106,  114. 

Savage,  Darrach  v.  36. 
Sayer  v.  Wagstaff,  36,  82. 
Schlenker,  Boddington  v.  50,  51,  52. 
Scholey  v.  Ramsbottom,  64. 
Schomoll,  Gammon  v.  104. 
Schroeder,  Fruhling  v.  7,  118. 
Scotland,  Bank  of,  v.  Christie,  5,  522. 
,  Ex  parte,  380. 


GRANT  ON  THE  LAW  OF  BANKING. 


Scotland,  Bank  of,  v.  Fenwick,  500. 

,  Smith  v. 



v.  Hit 

.  I|    504, 

,  1  181. 

v.  Franklin 

,  II  >r. 

::■•■.. 

,  Malcolm  v.   1.  1".  118,  121. 

v.  Porcher,  116,  l  is 

111. 
;.  Eden,  . 

.     '•     ■•..!!.  it.  32, 

lilw.  Co.  32, 
48. 

- 

Sharp,  Bx  parte,  B8,  211,  250,  280. 

Sharratt,  Carry  v. 

v.  l>artnall,  608. 

v.  Pisher,  I 

. 

v.  Picton,  G08. 

fcc    Uaihv.  Co.  \.  Woodcock, 

512. 

:  90. 

,  v.  Braitfa 

Sheppard  v.  Drj 
.  well,  Kath< 

".17. 
i,  10. 
Shillibeer  v.  CI. 
Shippam,  Cballen  v. 

12. 



■ 
1 

,  CowelJ  v.  . 

'on,  111.. "08. 



121. 

1 


191,   192, 


Bimson  v.  Ingham,  279,  280. 
Binclair  v.  Wilson 

m,  Balstead  v.  105. 
Bkerratt,  Bx  parte,  -  *  1 7  - 

Little  \.  12. 
Slater,  Caballero  \.  254. 
Sleecfa 

Grainger  v.  :;77,  486. 
■  T  v.  England,  Bank  of,  42,  128, 

Small  v.  Curric,  233. 

Smart    i     N 

v.  Btokes,  i ,;- 

Smith.  A.uriol  v.  122,  360. 

,  Bleaklej  i 

,  Boswell  \ 

v.  Cannan, 

,  Cowper  v. 

v.  Craven,  ill,  309. 

,  Esdaile  r. 

,  Bx  parte,  168,   181, 

200,  217. 

v.  Ferrand,  37,  83,  95. 

,  Fuller  v.  112,  ill. 

v.   Cold- worthy,  514. 

,  Haille  v.  215. 

,  Hill  v.  338,  386. 

v.  Hodson,  334,  421. 

v.  Hull  Glass  Co.  591. 

v.  Jameson,  41. 

v.  Mercer,  109,  411. 

,  Parker  v. 

,  Reg  v.  430. 

v.  Scotland,  Bank  of,  233. 

v.  Smith, 

v.  Ward,  366. 

,  Williams  v.  416. 

v.  Winter,  15  246,  248,  295. 

,  W lall  v.  211. 

Smyth's  Settlement,  He,  369. 

Ex  parte, 
Snell  13. 

Snow  v.  Leatham,  426. 

v.  Peacock,  64,  427. 

v.  Saddler, 

Solomo  ind,  Hank  of,  423. 

,  Ei  parte,  317. 

by  v.  Batcher,  436. 

V.  Han  i 

L72,  323, 
Sparling  v.  Pari 
Sparrow  v.  Chisman,  ! 

. 

,  Bi  parte, 
Spenser,  K.  v.  431. 

on  v.  L80. 
Spiller  v.  Job 

v. 

Spinier  v.  Spina 
Spindler  v.  Grellett,  114. 

Win, holt   i 
■    v.   kolm,    I 

ner,  Hughes  v.  143. 


TABLE    OF    CASES    CITED. 


Sprowle  v.  King,  23. 
Spry,  Reynell  v.  552. 
Spurling,  Davis  v.  351. 
Spurraway  v.  Rogers,  29. 
Staddon,  Ex  parte,  165,  419. 
Stainback  v.  Fernley,  548. 
Stanhope,  Decks  v.  550,  551. 
Stanhope's  Case,  542,  557. 
Stanley,  Lobb  v.  39. 
Staples,  Napier  v.  347. 
Stapleton  v.  Stapleton,  129,  134. 
Starey  v.  Barnes,  337. 
Starkey,  Jones  v.  215. 
Stead  v.  Thornton,  395. 
Steadman  v.  Duhamel,  17. 
Steele  v.  Hoe,  274. 

,  Taylor  v.  129. 

Steere,  Witt  v.  376. 
Stein,  Carstairs  v.  395. 
Stephens,  Ex  parte,  122. 
Stephenson  v.  Chiswell,  312. 

,  Innes  v.  41,  326,  349. 

Sterling,  Boehm  v.  32,  97. 
Stevens,  Dobell  v.  552. 

,  Ex  parte,  181,  193. 

v.  Hill,  58,  60,  110. 

v.  Masterman,  9. 

Stevenson  v.  Blakelock,  290. 
Steward  v.  Dunn,  462,  464,  474. 

,  Ex  parte,  287. 

v.  Greaves,  462,  470,  508. 

,  Rolin  v.  29,  48,  49. 

Stewart  v.  Fry,  7,  112.     " 

v.  Lee,  68,  69,  73,  326. 

Stickland  v.  M'Kean,  226. 

v.  Mansfield,  15. 

Stirling,  Boehm  v.  53,  62. 
Stodhart,  Deacon  v.  111. 
Stokes,  Brice  v.  349,  368. 

,  Ex  parte,  228. 

v.  Grissell,  16,  99. 

,  Smart  v.  16. 

Stone  v.  Compton,  239. 

v.  Marsh,  41,  349. 

,  Ogden  v.  85. 

Stones,  Turner  v.  408. 

Story,  R.  v.  432. 

Stoveld  v.  Eade,  280. 

Stracy  v.  England,  Bank  of,  358. 

Straffon's  Case,  456,  565,  566. 

Executors,  Re,  484. 

Strahan,  Reg.  v.  296. 
Strange  v.  Lee,  221,  265. 

v.  Wigney,  428. 

Strattcn,  Abbott  v.  357. 
Stright,  Ex  parte,  185. 
Strong  v.  Foster,  261. 

v.  Hart,  37. 

,  Hennell  v.  492. 

Stroud,  Ex  parte,  523. 
Stuart,  Brook  v.  244. 

v.  Bute,  Marquis  of,  2,  405. 

,  Murrow  v.  391. 

Stubbs,  Boultbee  v.  237,  238. 

January,  1857. — 4 


Stubbs,  Hughes  v.  94. 

Studley,  Vane  v.  35. 

Sturt,  Ex  parte,  153,  316. 

Sturtevant  v.  Forde,  63. 

Styan,  Re,  180,  182. 

Such,  Crossfield  v.  369. 

Sullens,  R.  v.  268. 

Surman,  Scott  v.  139,  156. 

Surtees,  Foster  v.  418. 

Sutherland,  Barnewall  v.  472,  476,  601. 

,  Maclae  v.  538, 540, 551, 554. 

v.  Pratt,  213. 

,  Wills  v.  472. 

Sutton,  Chapman  v.  254. 

v.  England,  Bank  of,  362. 

,  Hotham  v.  353. 

,  R.  v.  90. 

v.  Toomer,  65,  95,  404. 

Swan  v.  Scotland,  Bank  of,  20. 
Swann,  Woodbridge  v.  402. 
Swinton,  Jameson  v.  49. 
Sylvester,  Pocklington  v.  50,  51. 
Symonds  v.  Gas  Light,  &c.  Co.,  607. 

Taffs,  Reg.  v.  622. 
Tagart,  Ex  parte,  192. 
Tamplin  v.  Diggins,  331. 
Tanner,  Ex  parte,  183. 

,  Phipps  v.  25. 

Tassell  v.  Cooper,  5,  125. 
Tate  v.  Hilbert,  38,  50,  93. 
Tatlock,  Peel  v.  271. 
Taylor  v.  Dobbins,  39. 

,  Ex  parte,  521,  594. 

• ,  Gaunt  v.  5,  40,  352. 

v.  Hughes,  44,  509,  512. 

v.  Mather,  63. 

,  Reg.  v.  102. 

v.  Steele,  129. 

v.  Taylor,  2. 

,  Webb  v.  474. 


Teed  v.  Elworthy,  296. 

,  Hollond  v.  224. 

Tempest,  Phillipson  v.  504. 
Tennyson,  Ex  parte,  179. 
Thelusson,  Vanderdonckt  v.  114,  435. 
Thomas,  Auriol  v.  328. 

v.  Cooper,  397,  398. 

v.  Fenton,  97. 

,  Janson  v.  19,  29, 

,  Rogers  v.  353. 

Thomas's  Case,  564. 

Thompson  v.  Bell,  6,  297,  298,  519. 

,  Brown,  Janson  and  others  v. 

339. 

v.  Dominy,  190. 

,  Ex  parte  Re  Dil worth,  151. 

v.  Giles,  139,  141,  147,  152. 

v.  Heiferman,  93. 

,  Law  v.  515. 

,  Miller  v.  517. 

v.  Spieres,  180. 

Thorn,  Reg.  v.  430. 
Thorne,  Fancourt  v.  257. 


XXX1J 


QRANT    OK    THE    LAW    OF    BAHKING. 


Thorn  • 

,  Lunu  I 

_ 

Tlu.: 





v.  T: 

Threl&ll  r.  Giles,  171. 
Thurborn.  Ri 

181. 
Tidm  I 

Tiium  I  •!,  410,    111.  41  J. 

v.  \\ 

an,  Manningford  v.  2  - 
Tomkii  129. 

Toolmio  \ .  I 
,  Bi  parte, 

,  Kx  parte,  I 

her  v.  Hinton,  ;:■ 
hi.  Kennaway  v.  27  1. 
Trent  Navij  -       v.  Barley,  231. 

Trenttell  v.  Barandon,  203. 

L12. 
Traeman  v.  Fenton,  67. 
Tnunan,  Dnpanj 

tt  v.  Marsh,  1 19. 

Tucker,  Putl 


-.  1  10. 

TufheU,  Kx  parte, 

i  i.  210. 

Tnrborrille,  Reg.  v.  I 
Turner.  Bn 

•.    Haydon,  105,  109. 

,  Lister  v.  197. 



Tunic 

Turpi)  102. 

Turquand,  Royal  Brit  Hunk  v.  59 

1 



192. 

rjdall  v.  WaHoa, 

.  Wnitlock  v.  19. 

Urquhart,  Bradli 

I 

!-.  2. 
'•         •  '■  ■     b  Brewery,  In    • 

■11.  v'  7.  1  19,  382,  412. 

V 


Vaughan,  Alexander  v.  610. 

.  Grant  v.  20,  33,  39,  95. 

Vere  r.  As) 

,  Edwards  \.  129. 

.  Kx  parte,  190. 

Vernon  v.  Bouvei it 

v.  Hall,  331. 

v.  Hankey,  5,  G7,  89, 

v.  Hanson, 

Vickery,  Garriek  \.  41. 
Vincent,  Courtoy  i 
Vivian  v.  Cochrane,  581. 
.  ft  j.  v.   180. 

VnUian 

Wade,  Bainbridge  v.  253. 
Wade'a  Case,  24,  35. 

■  iff,  Sayer 
Wain  v.  Bailey,  432. 
Wainwright,  Barclay  v.  377. 

357. 
Wait.-.  K.  V.  2G8. 
Waithman,  Kx  parte,  L8Lj 
Wakefield  Bank,  Kx  parte,  154,  It;. 

,  N  irtn  v.  -j     . 

Walker  v.  British  Insurance  Co.  2GG. 

.  Caliot  v.  397,  G07. 

,  Fletcher  \ 

,  King  v.  145. 

,  Lysaghl  v.  277,  280. 

.  Pendleburj  \ , 

v.  Rostron,  7,  :>,  116,  117,  lis. 

,  Wharton  v.  96,  1 16. 

.  Zinck  v.  330. 

Wall,  Morris  v.  406. 

,  R,  \. 

Wallace  v.  Kelsall,  42. 

.  Wyatt  v.  350. 

Walmesley  v.  Child,  429. 
Walsh,  Aul 

v.  Gladstone,  102. 

.  R.  \.  101,  431. 

Walter'.-;  Case.  G  11. 
Walton,  UdaU  v.  88. 
Walworth  \.  Holt, 
Walwyn  v.  St.  Qointin, 

Warburg,  Bradley  v.  : ,  503. 

Ward  \.  Evans, 

,  Hutton  v. 

,  I..!..  Oxford  Railw.  Co.  v.  15. 

,  Robinson  \ , 

,  Smith  v.  31 

l,  Bond  \.  15,  i . 
Ware  \ .  Cumbi ;'• 

Waring,  William-  v.  1 1 1. 
Watr.  Hough  v. 
Warren.  Moore  » .  409. 

.  Will.y  V, 

Warrington  v.  Early,  1 14. 
Warwick  •  I  IT. 

,  fir..  Railw.  Co.,  Re,  81* 

v.  Rogers  58,  75,  83,  96,  107, 

113, 


TABLE    OF    CASES    CITED. 


XXX111 


Waterford  Railw.  Co.  v.  Wolseley,  494, 

592. 
Waters  v.  Brogden,  14. 
Watkins,  Ex  parte,  181. 
Watson  v.  Allcock,  235. 

v.  Charlemont,  Earl  of,  353. 

,  Everard  v.  106. 

,  Hamilton  v.  233. 

,  Heywood  v.  262. 

,  Parker  v.  231. 

,  Parkers  v.  235. 

v.  Poulson,  18,  32,  53,  55. 

Watson's  Case,  613. 

Watts  v.  Christie,  4,  89,  288. 

v.  Jefferies,  92,  366. 

,  Pedder  v.  120. 

v.  Porter,  3,  201. 

,  Reg.  v.  19,  75,  78. 

Waud,  Young  v.  181. 
Way  v.  Bassett,  129,  132. 
Webb  v.  Taylor,  474. 

,  Tyler  v.  203. 

Wedlake  v.  Hurley,  7,  116. 
Welch,  Bell  v.  253. 

v.  Reg.  430. 

West  v.  Reid,  185. 
Westerne,  Manning  v.  280. 
Westlake,  Spiller  v.  83. 
Weston  v.  Barton,  221. 
Wharton  v.  Walker,  96,  116. 
Wheatley,  Heward  v.  482,  485. 

v.  Leo,  10. 

v.  Purr,  134. 

Whiunay,  North  Western  Railw.  Co.  v. 

272. 
Whipham,  Ex  parte,  321,  344,  620. 
Whitaker  v.  England,  Bank  of,  49,  106, 

378. 
Whitall,  Moyser  v.  65,  95. 
Whit  bread  v.  Jordan,  203. 
White,  Baugh  v.  44. 

,  Blake  v.  232. 

,  R.  v.  145. 

Whitehead,  Holroyd  v.  109. 
Whiteley,  Woodford  v.  422. 
Whitfield  v.  Le  Despencer,  Lord,  422. 
Whitlock  v.  Underwood,  19. 
Whitmarsh,  Reg.  v.  580. 
Whitnash  v.  George,  267. 
Whitten,  Hawkins  v.  336,  420. 
Whitter,  Ex  parte,  382. 
Whitwell  v.  Bennett,  17. 
Whitworth,  Ex  parte,  261. 

v.  Gaugain,  201. 

Whyte,  Evans  v.  410. 
Wickham  v.  Gatrill,  268. 
Wienholt  v.  Spitta,  94. 
Wigg,  Henniker  v.  260,  282. 
Wigney,  Strange  v.  428. 
Wilbey  v.  Warren,  38. 
Wildman  v.  Wildman,  90,  353. 
Wilkins,  Bristed  v.  366. 

v.  Jadis,  106. 

Wilkinson,  Ex  parte,  180. 


Wilkinson  v.  Godefroy,  93. 

v.  Henderson,  296. 

v.  Johnson,  11. 

Willet  v.  Chambers,  26. 
Williams,  Bozon  v.  194. 

,  Brettell  v.  294. 

v.  Deacon,  8. 

v.  Everett,  7,  11,  116,  118. 

,  Ex  parte,  302. 

,  Keys  v.  194. 

,  Kilsby  v.  60. 

,  Marzetti  v.  5,  49. 

,  Morse  v.  438. 

v.  Nixon,  365. 

v.  Rawlinson,  221,  280. 

,  Reg.  v.  101. 

v.  Smith,  416. 

v.  Waring,  114. 

,  Wilmot  v.  108. 

Williamson,  Ex  parte,  610. 

v.  Johnson,  44. 

Willis  v.  England,  Bank  of,  88,  432,  433, 

458,  584. 

,  Ex  parte,  262. 

,  Fordham  v.  132. 

v.  Freeman,  331. 

v.  Plasket,  353. 

,  Vanderzee  v.  190,  284. 

Willoughby,  Hay  v.  484. 

,  R.  v.  102. 

Wilmot  v.  Williams,  108. 
Wilsmore,  Bristol,  Earl  of,  v.  93. 
Wilson  v.  Balfour,  178. 

v.  Barthrup,  45. 

v.  Craven,  249,  250,  265,  471. 

,  Ex  parte,  196,  310,  314. 

,  Forster  v.  335,  336,  405. 

v.  Hirst,  280. 

v.  Moore,  371. 

,  Reg.  v.  554. 

,  Sinclair  v.  209. 

Wills  v.  Sutherland,  472. 
Wiltshalge  v.  Davidge,  21. 
Winch  v.  Fenn,  328,  395. 
Windle,  Johnson  v.  429. 
Wing  v.  Harvey,  184. 
Wingfield  v.  Barton,  500. 
Winter,  Smith  v.  45,  246,  248,  295. 
Wintle  v.  Crowther,  45. 
Wise  v.  Charlton,  257. 

,  Gillard  v.  400. 

,  Parker  v.  226. 

Witt  v.  Steere,  376. 

Woolseley,  Waterford,  &c.  Railw.  Co.  v. 

494,  592. 
Womersley,  Gurney  v.  394. 
Wood,  Ex  parte,  180,  183,  506. 

v.  London,  Mayor  of,  603. 

,  Robinson  v.  366. 

Woodall  v.  Smith,  211. 
Woodbridge  v.  Swann,  402. 
Woodcock,  Garnett  v.  106. 

v.  Oxford  Railw.  Co.  226. 

;  Sheffield,  &c.  Railw.  Co.  v.  51 2. 


GRANT  ON  THE  LAW  01   BANKING. 


v.  Whiteley,  \-yi. 

iflfe,  Pannell  \.  114. 
Hardy  v.  108. 
Id  v.  16,  1: 

,  France  r. 

,  Miller  t. 

let,  Jombari  v.  I 

Wuollev.  Van  Wart.  v.  V.  110,  382 

Worthiagton,  Bdge  v.  200. 
Wray,  Boaanqnet  r.  479. 

v.  Kirton, 
Wright  v.  I 

.  Pin] 

v.  Reed,  406. 

v.  Russell, 

.  Todd  v.  470,  47  1,  4  7  7. 

Wyan  w.  Fowler, 

W'vatt.  Blew  v.  130. 


Wyatl  v.  Hertford,  Marq.  of,  79. 

— - v.  Wallace,  350. 

Wylie,  Bryson  v.  142,  170. 
— - — -.  K\  parte,  317. 

.  R.  ■ 

Wyndham,  Ex  parte.  314. 
Wynne  v.  Price,  194. 
— \.  Raikes,  383. 

LOO. 
Ranunett  v.  328,  387,  395. 
York.  Archbp.  of,  Metcalfe  v.  197. 
Young  v.  Bengal,   Bank  of,   144,  208, 

v.  Grote,  25,  : 

v.  Hope,  182. 

,  Leake  v.  521, 

,  Rowe  v.  104. 

v.  Wand,  181. 

Zick  v.  Walker,  152,  284,  330. 


TABLE  OE  STATUTES. 


The  pages  referred  to  are  those  between  brackets,  [     ]. 


27  Eliz.  c.  4,  197 

3  &  4  Ann.  c.  9,  406,  435 

s.  7,  36 

8  Geo.  I.  c.  8,  s.  43,  376 

2  Geo.  II.  c.  25,  362 

12  Geo.  III.  c.  72,  435 

31  Geo.  III.  c.  25,  s.  19,  97 

39  &  40  Geo.  III.  c.  28,  s.  15,     435 

c.  107,         435 

40  Geo.  III.  c.  36,  367 

48  Geo.  III.  c.  88,  s.  3,  21 

c.  149,  ss.  35,  36,37,  492 

49  Geo.  III.  c.  118,  128 

c.  126,  s.  3,         128 

52  Geo.  III.  c.  63,  144,  146 

53  Geo.  III.  c.  184,  s.  1, 
55  Geo.  III.  c.  60, 

c.  184, 

s.  8, 
s.  13 
s.  18, 
s.  19, 
sched. 
sched.  p.  1, 


72 

374 

20 

98 

17,  18,  39 

407 

60,  109 

38 

13,  16, 

24,  186 

S.  11,  21 

498 

357 

104,  107,  114 

s.  2,     59,  383 

85 

165,  385 

123,  128 

167,  169 

c.  46,     6,  18,  265,  268, 

291,  441,  444,468, 

486,487,  488,  584, 

593,  600,  602 

c.  46,  s.  1,  454 

s.  4,  460 

s.  5,  463 

7  Geo.  IV.  c.  46,  s.  6,  464 

s.  7,  464 


56  Geo.  III.  c.  68 

57  Geo.  III.  c.  99 
1  Geo.  IV.  c.  92,  s.  3 
1  &  2  Geo.  IV.  c.  78, 

6  Geo.  IV.  c.  16,  s.  3, 

s.  50, 
s.  56, 
s.  72, 


7  Geo.  IV.  c.  46,  s.  8, 
s.  9, 
S.  10, 
s.  11, 
s.  12, 
s.  13, 

s.  14, 
s.  15, 
s.  16, 
s.  17, 
s.  18, 
sched, 
c.  67, 
7  &  8  Geo.  IV.  c.  29,  s. 


464 

467,  475,  510 

508 

478,  481 

478 

455,  480,  481, 

482,  492,  561 

510 

458 

509 

510 

510 

B.,       465 

435,  463,  464 


9  Geo.  IV.  c.  23, 


1 

5', 
49, 

50, 
52, 
53, 


c.  49,  s. 
c.  73,  s. 
c.  92,  s 


1, 

2, 

3, 

4, 

5, 

6, 

7, 

8, 
,9, 

10, 
•11, 
,12, 
,13, 
,14, 
,15, 
.16, 

15, 
.  36, 

2, 

3, 

4, 


147 
100 
144,  148, 
153 
144,  146 
147,  148 
99 
447 
406,  438 
446 
446 
447 
447 
447 
447 
448 
449 
449 
450 
456 
452 
452 
452 
452 
14,  15,  16,  18 
208 
614 
614 
614 


.■KANT    ON    THE     LAW     OP    DANK  INC 


614, 

-.  :.  619 

62  a 

s.  10, 
B.  11. 

618 
618 

616 

615 

8.43,  616 

s.  46,  618 

618 
618 

618 

IV.\-lWill.IV.c.l3,       126 

B.  10,   354 

c.  47,  s.  9,    288 

c.66,  s.  3,357,429 

s.  4,    100 

s.  5,    354 

s.  6,    355 

355 

373 

355 

134 

■.Will.  IV.  r.  li.  ?.];.. 

s.  2c        JO, 621 
614 
c.83 

s.  3,      440 

22 
44  5  Will.  IV.  c.  40,  s.  12,  321 
64  7  Will.  H  616 

I.IV.A  1  \ 

601 
-.  l.  246,  468,  471,  it:. 
■17. 

i  ' 

:>1.  406 
201 

■ 
Yi.-t.  (.  11,8.  8, 

182 
:.  b.  1,  91 

ill,  8.  2,         601 

4  Virt.  <.  14, 


Virt. 


50,  1.  1- 

s.  2, 


s.  3, 


B.  88, 
.  B.  0, 


441 
442 

442 
355. 

365 
623 
148 
C.  71,8.  6,  623 

47G,  478,  601 

6  ft  T  Vi.  t.  c.  73,  s.  21,  82 

7  \  -  Vict  ■  450,  509 

-.  7.  406 

461 
s.  10,  439,  461 
B.  11,  439 

440 
s.  13,  111,  510 
B.  1  1.  441 

8.  16,  141 

B.  16,  445 

4  42 
B.  18,  443 

s.  19,        442,  443 
8.  20,  444 

S.  21,  444,400,485,583 
S.  22,  446 

S.  23,  450 

s.  24,  450 

s.  26,  1  10 

S.  28,  439 

0.  83,  023 

s.  1,  618 

018 
614,  615 
617,  61 

622 
618 
616 


s.  3, 

B.  10, 

s.  12, 

s.  14, 

s.  15, 

s.  18, 
c.  no, 
s.  2, 
S.  25, 

.:.  111. 

C.  Ill 

i 

c.  113, 

8.1, 


617 

617 
619 
014 

487, 580 
525 
580 
599 

524,  613 
599 
600 

600,  605 
•177 


i J.  i I  i 

B.  1,  579 

.-.  2,  -187,  579,  584,586 

.'.7!' 

s.  4,        579,  586 

',  581 
k"70  r.on 


8.7, 
8.  8, 

8.  10, 

B.  1  1, 

8.  12, 

8.  13, 


DI'J,   OBI 

579,  589 

580,  589 
580,  589 

580 
580 
580 


TABLE    OF    STATUTES. 


xxxvn 


7  &  8  Vict.  C. 

113,  s.  14 

580 

12  &  13  Vict. 

c.  106,  s.  125, 

167,  169 

s.  15, 

580 

192 

,185,353 

s.  16, 

581 

s.  133, 

432 

s.  17, 

582 

s.  139, 

378 

s.  18, 

582 

s.  164, 

379 

s.  19, 

462, 

582 

s.  165, 

88,  325, 

s.  20, 

462, 

582 

326 

s.  21, 

582 

s.  107, 

344 

s.  22, 

593 

596 

s.  171, 

165 

s.  23, 

587 

s.  177, 

123 

s.  24, 

587 

c.  108, 

504,  599 

t 

s.  25, 

588 

8.1, 

524 

s.  26, 

588 

s.  14, 

506 

s.  27, 

588 

s.  30, 

506 

s.  28, 

588 

c.  126,  s.  125, 

185 

s.  29, 

589 

13  &  14  Vict. 

c.  60,  s.  5, 

368 

s.  30, 

589 

s.  6, 

368 

s.  31, 

591.5S 

s.  22, 

368 

s.  32, 

592 

14  &  15  Vict 

c.  99,  s.  14, 

359 

s.  33, 

592 

c.  100,  s.  8, 

358,  429 

s.  34, 

592 

s.  13, 

270 

s.  35, 

592 

15  &  16  Vict. 

c.  55,  s.  3, 

369 

s.  36, 

592 

s.  4, 

369 

s.  37, 

592 

s.  5, 

369 

s.  38, 

592 

s.  6, 

369 

s.  39, 

592 

c.  86,  s.  48, 

198 

s.  40, 

592 

16  &  17  Vict. 

c.  39, 

14 

s.  41, 

592 

c.  45, 

616 

s.  42, 

592 

c.  59, 

98 

s.  43, 

593 

596 

c.  59,  s.  3, 

99 

s.  47, 

475 

477, 

487, 

s.  4, 

99 

488, 

580, 
600 

s.  19, 
sched. 

27, 116 
99,  451 

s.  48, 

523 

613 

c.  99,  s.  1, 

135,  145 

sched.  . 

A.. 

581 

s.  2, 

135 

] 

B. 

581 

s.  3, 

135 

"t 

587 

17  &  18  Vict 

c.  36, 

594 

8  &  9  Vict.  c. 

16,  s.  18, 

• 

185 

190 

c.  50,  s.  2, 

616 

c. 

27,  s.  6, 

623 

c.  56,  s.  8, 

616 

c. 

62, 

375 

c.  83,  s.  7, 

17,  96,  99 

c. 

97, 

360 

s.  8, 

96,  99 

10  &  11  Vict. 

c.  96, 

43 

s.  9, 

21,  96 

s.  1, 

367 

368 

s.  10, 

96 

s.  2, 

368 

s.  11, 

450 

11  &  12  Vict 

c.  45, 

524 

599 

s.  12, 

450 

s.  3, 

565 

566 

s.  13, 

451 

s.  5, 

566 

sched. 

27 

s.  6, 

613 

c. 90,338, 395, 396,  397,406 

s.  14 

551 

c.  104,  s.  180, 

623 

s.  50 

574 

c.  125,  s.  28, 

98 

s.  58 

551 

18  &19  Vict. 

c.  63,  s.  32, 

616 

s.  73 

551 

s.  33, 

616 

s.  90 

574 

s.  36, 

616 

12  &  13  Vict. 

c.  1,  s.  4, 

462 

19  &  20  Vict 

c.  20, 

450 

c.  71, 

623 

c.  47, 

550,  580 

c.  74, 

367 

,  368 

s.  2, 

524 

s.  1, 

4 

2,  43 

s.  83, 

44 

c.  106,  s. 

34, 

44 

c.  97,  s.  3, 

252,  254, 

s. 

65, 

314 

256,  274 

s. 

67, 

521 

s.  4,   2T 

,221,222 

s. 

77, 

507 

s.  6, 

383 

s. 

78, 

507 

s.  7, 

383 

g. 

87, 

324 

,  380 

c.  100,  s.  1, 

593 

s. 

92, 

469 

s.  2, 

593 

A  TREATISE 


THE  LAW  RELATING  TO  BANKERS. 


CHAPTER  I. 

RELATION  BETWEEN  BANKER   AND   CUSTOMER. 

The  ordinary  relation  between  banker  and  customer  is  this  :  the  cus- 
tomer opens  an  account  with  the  banker  by  paying  a  sum  of  money  into 
the  bank,  the  banker  undertaking  to  hold  himself  liable  for  the  payment 
of  a  like  sum  to  the  customer's  use,  either  paying  interest  on  the  money 
or  not,  as  the  course  of  business  of  the  bank  or  the  special  arrangements 
between  the  banker  and  the  individual  customer  may  be,  and  also  agree- 
ing to  honour  or  cash  any  cheques,  or  orders  for  the  payment  of  any 
sums  of  money,  which  the  customer  may  send  to  him,  during  business 
hours,  to  the  extent  of  the  sum  deposited. 

A  less  ordinary,  but  still  a  not  uncommon,  relation  between  banker 
and  customer  is,  that  the  banker  makes  advances  to  the  customer  or  al- 
lows him  to  overdraw  his  account,  charging  interest  on  the  advances, 
and  in  most  cases  requiring  a  deposit  of  securities,  or  obtaining  the 
guarantee  of  some  third  person,  for  the  repayment  of  such  advances,  with 
interest,  &c. ;  and  whilst  such  accommodation  continues  the  former  rela- 
tion of  the  parties  is  of  course  inverted. 

But  neither  of  these  relations  partakes  of  a  fiduciary  character,  nor 
bears  analogy  to  the  relation  between  principal  *and  factor  or  r-*9-, 
agent,  who  is  quasi  trustee  for  the  principal  with  respect  to  the  L  "*  J 
particular  matter  for  which  he  was  appointed  factor  or  agent. 

Money  paid  into  a  bank  ceases  altogether  to  be  the  money  of  the  per- 
son paying  it  in ;  it  is  the  money  of  the  banker,  who  is  bound  to  return 
an  equivalent  by  paying  a  similar  sum  to  that  deposited  with  him  when 
he  is  asked  for  it.  (a)  To  all  intents  it  is  the  money  of  the  banker  to  do 
as  he  pleases  with ;  though,  it  is  true  that,  in  a  popular  sense,  it  is  spoken 
of  as  "my  money  at  my  banker's ;"  "my  balance  at  my  banker's;"  and 

(a)  Foley  v.  Hill,  2  H.  L.  Cas.  36. 

V 


•  .KANT    OB    THE    LAW    OF     B  AN  KING. 

though  do  one  ran  doubt  that  in  ordinary  language  <<  ready  money"  in- 
clude* the  speaker's  balance  at  hifl  banker's.     Accordingly,  many  deci- 
have  been  made  construing  phrases  occurring  in  wills,  of  this  de- 
scription, to  cany  Bums  Btandiug  in  a  banker's  books  to  the  credit  of  the 
'  »r.  • 

This,  looking  at  all  the  tenna  of  a  will,  baa  been  held  to  be  the  extent 
of  a  bequest  of  "all  my  ready  money."(i) 

-  money  at  a  banker's,  placed  to  the  trade  account  of  a  trader,  has 
been  oonatrued  to  pass  in  hia  will  under  "all  my  Btock  in  trade. "M 

I  >    the  balance  in  a  testator's  favour  at  hia  banker's  may  be  included 
under  the  expression  -all  nay  debts/'  mid  pass  accordingly. (V) 
Or  the  balance  at  a  banker's  may  pass  as  "money  in  hand."(') 

-  tin  balanoes  at  testator's  banker's  upon  a  current  account,  and  also 
upon  a  deposit  account,  where  deposit  uotes  or  vouchers  were  given  by 
the  bank  as  a  security  for  tin-  money,  the  balance  carrying  interest  and 
considered  as  money  at  the  disposal  of  the  depositor,  and  as  readily  ac- 

oesaible  *by  him  as  money  in  an  ordinary  account  current, -were 
LI     -I  both  held  to  pass  under  "  all  my  moneys. "(f) 

But  still  the  legal  relation  of  banker  and  customer,  in  their  ordinary 
dealings  in  money,  is  purely  ami  simply  that  of  debtor  and  creditor  re- 
dely. Money  paid  into  a  banker's  is  merely  a  common  law  debt, 
and  cannot  be  :_r"t  out  again  by  means  of  a  bill  in  equity,  there  being 
nothing  of  a  fiduciary  character  in  the  connection  between  the  par- 
Ami  it  seems  tint  the  statute  of  limitation-,  run-  against  this  debt  as 
against  any  other  simple  contract  debt,  ami  consequently  bankers,  with 
whom  money  has  been  depositnl,  might  insist,  it'  there  had  never  been 
any  payment  into  tie-  account  subsequently  to  the  first  deposit,  and  no 
settlement  with  the  customer,  that  they  hail  never  promised  to  pay  the 
balance  within  bu  years,  &o,  and  that  might  be  a  good  defence  at 

law.(A) 

If  bankers  were  trustees  of  momy  of  their  customers  in  their  hands 
thifl  mU8t  follow,  that  notice  to  tin  in  of  the  drawer  having  assigned  to 
tin-  payee  of  a  cheque  an  interest  in  bo  much  of  the  drawer's  money 
would,  of  itself,  Mn'1  tne  bankers  u>  pay  to  the  payee  or  bearer,  and  give 


•  r  v.  Ifarchant,  l  I'liill.  Oh.  P..  351 

.    rt  v.  Karl  of  1: 

Ml.  n.  ;    see  1   I'liill.  Tail. 

12 :  supported  l   I'liill.  :;•  gs  v.  Mor- 

afflrmed,  Hill  v.  Mason,  2  Jac.  .v  vv 

.lor,  1  .lur.   l''l. 
Maiming  v.  Purchell,  2  6m.  A  G.  292. 

Poley  v.  Hill,  2  II.  I.  I  A  banker  as  a  witness  is  hound  to 

■  r  what  the  balance  of  a  party  to  b  canse  was  on  a  given  day,  a.-  the  know- 

■  him  in  tie-  nature  of  8  Confidential  or  privileged  coiinniini- 

■  .-1,1,  2  Oai 
. .  Hill,  l  I'hill.  101,  i"">.     It  is  ao  breach  or  contract  to  pay  interest 
te.i,  that  tin-  banker  bad  not  regularly  entered  the  interest  in  his 

lire.]  to  lie  in  his  hands  tor  eight  years.      Folej 

v.  Hill. 'j  H   l,  i  '■-.  10.     'I  •■  which  they  charge  inter* 

auctioned  by  the  courts,     ''oily. 

Pftrtre 


RELATION  BETWEEN  BANKER  AND  CUSTOMER.    4^ 

the  payee  or  bearer,  on  non-payment,  a  right  of  suit  in  equity  or  of  action 
at  law  against  the  bankers. (n*)  But  the  laic  is  not  so ;  for  it  has  been  ex- 
pressly decided  that  money  deposited  with  bankers  to  be  paid  to  a  third 
person  is  not  money  had  and  received  to  the  use  of  that  person  until  the 
bankers  have  bound  themselves  *to  pay  it  over.(&)  The  debt  until  r-^±-\ 
then  remains  between  them  and  the  customer ;  so  that  in  case  of  L  J 
non-payment  to  his  order  the  customer  is  the  proper  party  to  sue,  and, 
as  will  be  seen,  may  recover  substantial  damages  for  the  injury,  always 
assuming  that  his  account  at  the  time  shows  a  sufficient  balance  in  his 
favour.  The  customer  has  also  the  right  of  ordering  the  banker  to  carry 
his  balance,  or  any  part  of  it,  to  any  other  account  kept  with  the  banker 
by  any  other  person,  and  this  may  be  effectually  done  either  by  a  cheque  or 
order  in  writing  or  orally,  though  a  formal  mode  is  usually  adopted. (?) 
It  is  of  the  nature  and  essence  of  the  transactions  between  banker  and 
customer  that  the  latter,  having  a  balance  in  his  favour,  shall  be  able  to 
command  payment  at  sight,  (m) 

But  although  there  is  nothing  in  this  ordinary  relation  to  constitute 
the  banker  a  trustee,  he  may,  of  course,  by  agreement,  take  upon  him- 
self the  character  of  agent,  or  make  himself  a  trustee  towards  a  cestui 
que  trust ;  for  example,  if  a  customer  deposits  exchequer  bills  with  a 
banker,  and  he  undertakes  to  receive  the  interest  upon  them,  or  under- 
takes to  negotiate  or  make  sale  of  them,  and  to  credit  the  customer's  ac- 
count with  the  proceeds  of  the  sale,  in  this  case  it  is  obvious  he  is  in  the 
position  of  trustee,  and  partly,  at  least,  sustains  a  fiduciary  character ; 
but  this  service  may  or  may  not  be  appended  to  his  employment  of 
banker ;  his  trade  of  banker  is  totally  independent  of  it ;  his  trade  of 
banker  consists  of  the  general  trade,  to  which  the  other  is  an  accidental 
addition,  (n) 

*So  when  the  banker  receives  money  to  invest  in  stocks,  or  re-  r5ic-  -. 
ceives  orders  to  appropriate  the  customer's  balance,  or  a  specified  L  J 
part  of  it,  to  any  specified  purpose,  and  assents,  or  does  not  repudiate 
the  orders,  he  is  in  the  situation  of  a  trustee  or  agent  with  reference  to 
that  money,  &c. 

It  might  be  supposed,  indeed,  to  be  a  very  simple  and  obvious  con- 
clusion to  arrive  at,  and  one  that  required  the  least  possible  investiga- 
tion in  order  to  satisfy  all  who  turn  their  attention  to  such  matters,  that 
the  relation  of  banker  and  customer  is  the  relation  of  debtor  and  creditor. 
But  this  has  not  proved  to  be  the  case,  and  that  notwithstanding  it 
is  to  be  found  laid  down  in  times  previous  to  the  introduction  of  banking 

(i)  Dearie  v.  Hall,  3  Russ.  1 ;  adopted,  Watts  v.  Porter,  1  Jur.  (N.  S.)  133,  Q.  B. 
See  infra,  24,  n.  (x). 

(k)  Malcolm  v.  Scott,  5  Exch.  610;  see  6  Hare,  570. 

(1)  Watts  v.  Christie,  11  Beav.  551 ;  see  2  B.  &  A.  42. 

(m)   11  Beav.  546. 

(w)  Per  Lord  Brougham  in  Foley  v.  Hill,  2  H.  L.  Cas.  44.  But  a  bill  for  an  ac- 
count held  to  lie  against  a  banker  by  his  customer.  See  Bowles  v.  Orr,  1  Y.  & 
Coll.  464.  All  receipts  given  by  bankers  for  money  received,  which  shall  entitle 
or  be  intended  to  entitle  the  person  paying  the  money  or  the  bearer  of  such  re- 
ceipts to  receive  the  like  sum  from  any  third  person  are  chargeable  with  stamp 
duty.     See  3  Welsby  and  Beavan's  Statutes,  1259. 


H  i.KA.NI     OH     Till:     LANS     01    BANKING. 

this  country,  that  generally  it'  money  be  delivered  to  be  re-delivered, 

fan]  debt  lies;(o)  v.  t  the  oourts  have  been  under  the  necessity  of 

repeating  that  doctrine  in  banking  cases  almost  more  freqnently  than  any 

other  doctrine  of  the  law  i-  to  be  found  repeated.     The  principle  must 

dod  be  considered  to  be  finally  and  irreTocably  set  at  rest.(^>) 

A-  the  right  of  the  easterner  is  to  draw  out  the  whole  of  the  sum  he 

site  with  til*-  banker  at  any  time  when  he  Bhall  so  please,  the  ac- 

oeptanoe  by  the  banker  of  a  bill  drawn  upon  him  by  his  customer  against 

mount  of  the  balance  in  his  favour,  and  made  payable  at  a  distant 

is  in  effect  a  borrowing  of  the  Bum  until  that  day  by  the  banker ; 

f.>r  tin  customer,  by  drawing  the  bill,  consents  that  that  which  is  paya- 

1.1.-  immediately  shall  not  be  payable  until  the  expiration  of  the  bill,  and 

looeptanoe  by  a  banker  was  held  to  be  a  borrowing  or  owing  of 

money  upon  a  bill  within  the  *meaning  of  the  former  Bank  of 

l    °J  England  acts,  3  A  I  Will.  IV.  o.  98,  and  7  Geo.  IV.  c.  46,  which, 

in  certain  circumstances,  forbade  Buch  borrowing,  ^c.(j) 

Some  bankers  open  what  is  called  a  deposit  account  with  any  customer 
lesiree  to  deal  in  that  manner;  ( that  is  to  say,)  the  customer  de- 
-  a  Bum,  on  which  the  banker  pays  interest  as  may  be  agreed,  and 
which  may  be  entirely  withdrawn  at  any  time  by  the  customer,  without 
notice,  on  presenting  the  receipt  with  his  name  indorsed  on  it,  when  the 
principal,  with  interest  upon  it  to  the  day  of  repayment,  is  handed  to 
him.(r) 

uxors,  as  we  have  .-aid,  are  hound  to  obey  the  orders  of  their custo- 
within  the  usual  course  of  business;  if  they  disobey  diem  they  are 
usible  both  for  the  delay  and  any  consequence  which  directly  ful- 
the  delay.     Thus  a  house  in  America  employ  an  agent  in  Birming- 
ham to  purchase  and  Bhip  to  them  certain  goods:  on  account  of  whioh 
-•ml    to   him   a   bill  drawn  by  One  A.  iii  America  on   B.  in  London, 
but  without  indorsing  it.     The  agent  directs  his  bankers  to  obtain  B/s 
tance  of  it ;  1!.  refuses  acceptance  ;  of  which,  however,  the  bankers 
omit  to  give  any  notice  until  the  bill  is  due,  when  they  again   present  it 
and   it   i-   dishonoured.      Before   the   bill  arrived  in  this  country  A.  had 
me  bankrupt,  DOVer  having  had  any  funds  in  the  hands  of  B.     Then 

damage  done  to  the  agent,  but  to  what  amount?     Not  to  the 

whole  amount  of  the  bill,  because  of  the  circumstance  that  the  house  in 

ica,  not  having  indorsed,  were  n< .t  entitled  to  notice  of  dishonour 

bill,  and  ^till  remained  liable  to  him  for  the  price  of  the  goods  he 

■  nt  out  to  them  j  also  the  drawer  *as  not  entitled  to  notice,  because 

•  1  DO  funds  in  the  hand-  of  the  drawee  j  therefore  all  that  the  agent 

■ 
per  Boiler,  J.,  Vernon  ▼.  Hanker,  2  T.  B.  121 ;  per  Grose,  J.,  id.  124 ; 


!90    Bank  of  Scotland  v.  Christie,  8  Ola.  &F.  227 
Deffi       I  De  G    M    fcG  Folej  \.  Hill.  2  11.  L.  Oas.  31. 

•  !  ',  [land  v.  Anderson,  i  Scott,  1 18. 

Bi  i.      .    ll 


RELATION  BETWEEN  BANKER  AND  CUSTOMER.   43 

was  entitled  to  recover,  as  the  circumstances  of  the  case  stood,  was  the 
*dainage  he  had  sustained  by  reason  of  his  having  been  delayed  p7  , 
in  prosecuting  his  remedy  against  the  drawer. (s)  L      J 

In  ordinary  circumstances  it  is  obvious  the  bankers  might  have  become 
liable  for  the  whole  amount  of  the  bill,  namely,  if  the  American  house 
had  indorsed,  and  the  bill  had  been  drawn  against  effects. 

But  it  is  only  to  their  customer  that,  in  the  absence  of  any  act  of  theirs, 
they  are  responsible ;  thus  bankers  receive  bills  from  a  foreign  corres- 
pondent with  directions  to  pay  the  amount  to  the  plaintiff :  when  he  ap- 
plies to  them,  they  refuse ;  afterwards  the  amount  of  the  bills  comes  to 
their  hands.  The  plaintiff  cannot  sustain  an  action  against  them  as  for 
money  had  and  received  to  his  use.(tf) 

If,  however,  the  bankers  had  assented  to  the  order,  and  informed  the 
plaintiff  that  they  held  the  money  for  him,  he  might,  of  course,  have 
sued  theni.(w) 

However,  an  order  by  a  customer  to  his  bankers  to  hold  the  customer's 
money  at  the  disposal  of  A.  B.,  is  revocable  until  actual  appropriation  or 
payment  of  the  money  accordingly,^)  or  until  a  promise  by  the  banker 
to  A.  B.  to  make  such  payment.^) 

We  have  already  stated  the  duty  of  a  banker  to  be  to  conform  to  the 
orders  of  his  customer,  with  respect  to  the  money  deposited  by  the  cus- 
tomer, so  long  as  there  is  in  his  hands  a  balance  in  favour  of  the  custo- 
mer, and  the  orders  relate  to  things  which  it  is  the  usage  and  practice  of 
the  particular  bank,  or  of  the  bankers  in  the  district,  to  do  for  their  cus- 
tomers, or  which  the  bank  has  specially  agreed  with  the  customer  to  do 
for  him.  Now,  if  the  bankers  perform  such  orders  punctually,  they  will 
often  be  exonerated  from  *loss  in  cases  where  it  may  be  difficult,  r*g-i 
perhaps,  to  see  any  other  ground  for  holding  them  irresponsible  L  J 
except  that  the  customer's  orders  have  been  faithfully  and  fully  per- 
formed without  negligence  or  delay. 

Much  more,  then,  will  they  be  irresponsible  if,  acting  as  the  agents  of 
other  bankers  with  whom  a  party  has  an  account,  they  conform  to  the 
orders  of  that  party,  though  with  him  they  have  no  account  at  all. 

Thus,  where  A.'s  broker,  by  his  directions,  was  accustomed  to  pay 
dividends  into  a  banker's  in  London  to  A.'s  credit  in  account  with  a 
bank  at  Abingdon,  where  A.  resided,  and  the  London  bankers  had  been 
accustomed  to  act  accordingly,  accepting  the  payments,  giving  credit  to 
the  Abingdon  bank  and  advising  them  by  post,  &c,  next  day :  and  a 
certain  payment  of  this  kind  was  made  on  14th  October,  into  the  Lon- 
don house  by  cheque,  and  they  wrote  to  advise  the  Abingdon  bank  in 
the  usual  way  by  the  post  of  the  15th,  on  the  morning  of  which  day  the 
Abingdon  bank  stopped  payment  and  never  again  opened  the  bank  for 


(*)  Van  Wort  v.  Woolley,  3  B.  &  C.  439. 

(t)  Williams  v.  Everett,  14  East,  582  ;  Stewart  v.  Fry,  7  Taunt.  339  ;  Wedlake 
v.  Hurley,  1  Cro.  &  J.  83. 

(u)  Fruhling  v.  Schroeder,  2  Bing.  N.  C.  77. 

(x)  Gibson  v.  Minet,  Ry.  &  M.  68 ;  S.  C,  1  Car.  &  P.  247  ;  2  Bing.  7  ;  see  Brad- 
bury v.  Anderton,  1  C.  M.  &  R.  486. 

{jy)  Lilly  r.  Hays,  5  A.  &  E.  548  ;  see  Walker  v.  Rostron,  9  M.  &  W.  411. 


44  BBAH1    ON    Till:    LAW    <>  f   BANKtNCI 

business,  and  on  that  day  the  Abingdon  bankers  wore  indebted  to  the 
I.  i  '  rge  amount;  the  London  honae  received  notice  of 

a  the  l"»th      A.,  haa  no  claim  against  the  London  bank  for 
the  j  made;  for  the  eonrae  of  business  .-hows  thai  A.  and  the 

rv  bankeri  agn  i  d  that  tin  \  would  aooounl  to  him  for  all  earns  so  to 
be  paid  into  the  London  hooae  as  above,  and  thai  the  London  house  had 
actually  earried  the  money  to  their  oredit.(z) 

II.  r.  the  ground  ofdeeiaion  Beema  to  be, thai  the  London  bankers,  by 

the  arrangement  by  which   in  effect  tiny  undertook  t<> 

comply  with  A.'s  orders  as  to  any  money  that  might  come  to  their  hands 

purporting  to  be  paid  in  l>y  bis  authority  and  under  directions  from  him 

regarded  his  aooounl  with  the  country  bank,  of  which  *con- 

i    '    J  formity  thecourse  of  dealing  was  evidence  conclusive  as  not  heing 

met  by  counter  j  -r<  >-  >t".  the  London  bankers  were  exonerated  from  liability 

to  li i in ;  hut,  possibly,  if  it  could  have  been  Bhown  that  they  had  not  in 

mot   given  credit  for  the  money  in  account  with  the  Abingdon  bank 

re  it  was  reclaimed  by  A.,  the  result  would  have  been  otherwise.(a) 

It  will  be  observed  that  A.  was  not  a  customer  of  the  London  hank; 

but  in  another  east-,  where  a   person  paid  money  into  a  London  hank, 

also  ii' -t  being  a  customer  of  the  hank,  in  order  that  they  might  cause  it 

paid  to  him  or  his  order,  through  their  correspondent-,  bankers  in 

a  country  town,  on  a  certain  day,  and  they  received  the  money,  but  did 

the  money  to  be  paid  on  the  day,  whereby  the  party  -uttered 

damage,  &».,  he  was  apparently  considered  to  have  a  good  cause  of  action 

1    adon  hank,  on  the  ground  that  the  receipt  of  the  money 

!  ■_' 1  consideration  for  an  undertaking  to  the  above  effect,  and 

that  they  might  be  sued  for  the  breach  of  their  promise  in  that  respect 
bere  the  Loudon  bankers,  it  is  submitted,  must  either  be  considered 
I  dlees  eras  debtors  in  respect  of  the  money  paid  inj  but 
it"  tlu-y  wen-  the  farmer,  then  it  would  have  been  a  breach  of  their  duty 
if  they  had   not   remitted   the  identical   coins  or  bank  notes  paid  in — a 
proposition  which  could  hardly  be  maintained  as  against  bankers,  there- 
it  would  .-eeiu  that  the  party  paying  in,  though  not  having  a  ruu- 
aing  account  with  them  as  s  customer,  must  be  considered  as  a  oustomei 
pro  /  iid  the  hanker-  ;i<  debtors  to  him  jim  tanto,  and  liable  to 

'  ly  with    hi-    orders    according    tO    the    USUal   relation  of  hanker  and 

r*ifii       *Where  A.,  not  filling  any  peculiar  character  or  capacity,  re- 
monej  delivered  to  him  by  B.,  to  be  earried  to  a  particular 

'.'.  .::.  ...  401,  401,  Exch.  Ch.;  Bee  also  11  A.  &  E.  9 

•in. hi.  cited   i  Exch.  101,  where  Lord  Abinger,  C.  B., 
beld  &  a  payment  might  be  countermanded.     Bet   Atkin  v. 

:  Walker  v.  Etostron,  9  M.  &  \V.  411, 
•    2  Bing.  7. 
Bbillibeer  ▼.  GHj  i  the  declaration  had  in  the 

e  alleged  the  pat  tomer,  bnl  the  allegation  haying 

ind  the  amended  declaration  wag  demurred  to.    The 
n  turned  to  the  plaintiff  bj  the  bankers,  who  afterwards  compromised 
3. 1'..  Wlieatlev  v.  Loe  (in  error),  Cro.  J  -case, 

i  as  i  it-. I  b  I    .1..  i  Balk. 


RELATION  BETWEEN  BANKER  AND  CUSTOMER.    45 

place,  and  there  to  be  paid  to  a  particular  person  on  account  of  B.,  and 
A.  takes  the  money,  but  afterwards  omits  to  perform  these  directions, 
and  in  answer  to  B.'s  inquiries  says  that  he  has  lost  the  money;  it  was 
held,  that  an  action  for  money  had  and  received  was  maintainable  by  B. 
on  these  facts  merely,  though  it  was  objected,  that  he  ought  to  have 
brought  a  special  action  for  the  negligence,  (c) 

There  seems,  therefore,  to  be  authority  quite  sufficient  for  the  position 
that  any  one  who  takes  upon  him  to  remit  money  and  receives  it,  the 
owner  confiding  that  he  will  do  so,  has  assumed  a  trust  which  he  is 
bound  to  perform,  notwithstanding  that  he  gains  nothing  by  the  trans- 
action ;(<?)  and  certainly  it  has  never  been  laid  down  that  a  banker  stands 
in  such  a  situation  as  renders  his  liability,  in  such  circumstances,  less  ex- 
tensive than  that  of  an  ordinary  person  ;  on  the  contrary,  he  may  fairly 
be  considered,  his  business  being  to  deal  in  money,  and  to  facilitate  the 
transmission  of  money,  to  be  in  a  situation  or  position  in  which  skill  is 
implied,  and  therefore  where  an  omission  to  use  due  skill,  even  on  an 
occasion  of  a  gratuitous  employment,  is  taken  as  gross  negligence. (e) 

With  reference  to  the  rights  of  a  third  person  in  such  case,  we  may 
observe  in  general,  the  rule  is,  money  paid  into  a  banker's  to  be  paid  to 
a  third  person  is  not  money  had  and  received  to  his  use  by  the  bankers 
until  they  have  bound  themselves  to  pay  it  over.(/) 

*So  that,  although  in  general  bankers  are  bound  to  comply  .-  #^  -■ 
with  the  orders  of  their  customers,  yet  they  may  refuse,  and  by  L 
that  means,  whatever  liability  to  the  customer  they  incur,  they  relieve 
themselves  from  all  responsibility  to  the  person  in  whose  favour  the 
order  is  made  ;{g)  or  rather  such  responsibility  does  not  arise  before  they 
do  something  to  admit  it,  as  by  agreeing  to  that  effect  with  him. 

The  proposition  has  been  laid  down  more  than  once,  that  it  is  part  of 
the  duty  of  a  banker  to  his  customer  to  be  acquainted  with  his  customer's 
handwriting ;  it  has  even  been  said,  as  we  shall  see,  that  he  is  bound 
not  only  to  know  his  customer's  handwriting,  but  also  what  is  not  his 
customer's  handwriting ;  and  there  seems  to  be  no  doubt  that  it  would 
be  in  accordance  with  all  the  decisions  in  which  the  courts  have  defined 
the  duties  of  bankers,  to  hold  that  a  banker  is  responsible  to  his  cus- 
tomer (or  must  bear  the  loss  if  any  loss  arises)  for  the  consequences  of  his 
mistakes  or  oversights  in  this  respect.  However,  it  has  been  intimated 
in  one  case,  where  a  bill  of  exchange,  purporting  to  bear  the  indorse- 
ment of  a  customer,  but  dishonoured,  was  paid  by  the  banker  for  the 
customer's  honour,  and  he  afterwards  discovered  the  indorsement  to  be 
forged,  and  have  notice  to  the  holder  of  the  bill  the  same  day  on  which 
the  payment  was  made,  that  the  banker  might  perhaps  recover  from  the 
holder  the  money  he  had  paid  him. (A)     However  this  may  be,  he  could 

(c)  Barry  v.  Roberts,  3  A.  &  E.  118. 

(d)  Wheatley  v.  Loe  (in  error),  Cro.  Jac.  667 ;  S.  C,  Palm.  Rep.  381,  cited  by 
Lord  Holt  in  Coggs  v.  Bernard,  1  Salk.  26,  and  Barry  v.  Roberts,  3  A.  &  E.  118. 

(e)  Per  Lord  Loughborough,  C.  J.,  Shiells  v.  Blackburne,  1  H.  Bla.  158. 

(/)  Malcolm  v.  Scott,  5  Exch.  610.     Compare  S.  C,  6  Hare,  570,  per  Parke,  B., 
9  M.  &  W.  414,  per  cur.,  id.  421 ;  see  also  3  Mac.  &  G.  40,  51. 
(g)  Williams  v.  Everett,  14  East,  582. 
(h)  Wilkinson  v.  Johnston,  3  B.  &  C.  428,  cited  9  B.  &  C.  906. 


.  \NT    "N    THE    LAW    OF    BANKING. 

iint  :it  any  rate,  aooofdiag  to   the  above  rule,  recover  from  the   cus- 
t.'iiur. 

The  nature  of  the  bu-dm  —  of  bankers  has  been  laid  down,  by  very 
high  authority,  to  be  pari  of  the  law  merchant ;  and  it  is  to  be  judicially 
notioed  by  Hbe  oourte 


[*12]  *CHAPTER    II. 

I  BBQUK8. 

A  i  SSQU1  on  a  banker,  ot  as  it  is  sometimes  called,  a  banker's  draft, 
i-  a  written  order  l'<.r  the  payment  "fa  specified  sum  of  money  to  a  per- 
9on  oamed,  or  bearer.  It  i-  directed  to  the  banker,  and  is  usually  signed 
by  the  person  who  draws  it.  and,  out  of  whose  moneys  deposited  with 
tin-  hanker,  it  is  t<>  be  paid  "ii  presentment.  Its  legal  effect  is,  in  some 
Blight  degree,  that  "fan  inland  hill  of  exchange  drawn  on  the  banker, 
ami  payable  to  the  bearer  on  demand ;  in  some  respects,  however,  as  will 
be  Bhown,  it  differs  materially  from  such  instrument. 

Tin-  form  "fit.  when  unstamped,  is  usually  the  following: — 

Jjondon,  January  1,  1856. 

SIi  SB8B8.  Holdfast  &  Co. — Pay  to  Abraham  Newland,  or  bearer,  the 
sum  of  twenty  pounds. 

620,  0*.  OaT.  John  Stiles. 

No  precise  Gram  of  words  is  essential;  any  words  that  signify  not  a 
precatory  request,  hut  an  order(a)  t"  pay  a  sum  of  money,  will  suffice, 
provided  the  following  points  !»■  observed: — 

1 .    '/'/,.//  //<■  jntp,  r  l„  din  ctt  -1  /"  tic  bank*  rs  by  tin  ir  ]>r<>j><  r,  or  usual, 

>ii/l>   iiinl  fir  in. 

'1.  Tim'  it  In  tint' 'I,  viz.,  with  tli^  /iiirni  qf  the  ])laec  where,  and  a 
dayqftht  month  and  year  on  or  be/on  which,  tin  cheque  was  drawn. 

That  It  contain  th-  sum  to  f>i   paid,  which  must  not  he  under  20s. 
r  *n  ~i      *"*■    Thatitbi  made  pay abU  tobearer.(V\ 
"  J      .">.    That  it  A-  signed  by  the  party  drawing. 

It  that  a  oheqne,  in  any  "ther  language  than  the  English, 

would  n"t  be  according  t>>  the  usage  of  hankers  in  this  country,  and 
therefore  a  hanker  might  legally  refuse  to  cash  such  a  cheque.  We 
shall  state  the  reasons  for  these  several  requisites  in  their  order,  toge- 
ther with  the  principles  and  rules  that  have  been  laid  down  respecting 
them,  and  mch  illustrations  and  examples  a-  appear  to  conduce  to  the 
full  comprehension  of  the  subject. 

1     Am  to  tin   A'li/n  .->. — A  cheque,  being  in  fact  an  "pen  letter  nf  request, 

it  is  obvious,  to  be  operative,  bear  upon  it  the  name  of  the  person 

Per  Lord  Campbell  in  Bank  of  Australasia  v.  Breillatt,  C  Moo.  P.  C.  173,  re- 
•  .  v.  Barnatt,  13  ''la.  .v  I'.  787. 
Blackford,  i  Moo.  &  If.  171. 

:.  38. 


CHEQUES.  47 

who  is  requested,  as  well  to  indicate  to  the  bearer  where  to  present  it 
for  payment,  as  to  show  the  bankers  who  it  is  that  is  called  upon  to 
cash  the  order.  On  the  same  grounds  that  a  bill  of  exchange  must 
have  an  address  according  to  the  custom  and  usage  of  merchants,  a 
cheque  ought  to  have  one.(c) 

If  the  bank  is  carried  on  under  a  firm,  either  the  proper  and  full 
style  of  the  firm,  or  the  style  by  which  it  is  usually  designated  and 
known,  ought  to  be  used. 

No  person  but  the  person  addressed  could,  after  cashing  the  cheque, 
have  a  right  to  recover  from,  or  have  allowed  in  account  with,  the 
drawer,  the  sum  so  advanced,  which  would  in  fact  be  in  the  nature  of  a 
gratuitous  payment. 

2.  As  to  the  Date. — The  Stamp  Act,  55  Geo.  III.  c.  184,  Schedule, 
part  1,  exempts  from  all  stamp  duties,  "  all  drafts  or  orders  for  the  pay- 
ment of  any  sum  of  money  to  the  bearer  on  demand,  and  drawn  upon 
any  banker  or  bankers  *[or  any  person  or  persons  acting  as  a  ^  ^ .  -. 
bankerl(fZ)  who  shall  reside  or  transact  the  business  of  a  banker  L  J 
within  ten  miles  [altered  to  fifteen  miles  by  9  Geo.  IV.  c.  49,  s.  15]  of 
the  place  where  such  drafts  or  orders  shall  be  issued ;  provided  such 
place  shall  be  specified  in  such  drafts  or  orders,  and  provided  the  same 
shall  bear  date  on  or  before  the  day  on  which  the  same  shall  be  issued  ; 
and  provided  the  same  do  not  direct  the  payment  to  be  made  by  bills  or 
promissory  notes. "(d) 

Hence  the  real  place  where  the  cheque  is  issued  ought,  in  order  to 
save  the  stamp,  to  be  in  all  cases  stated  on  the  face  of  it.  Where  an 
unstamped  cheque  was  dated  at  Llanelly,  but  it  appeared  to  have  been 
drawn  and  issued  at  a  country  house  called  Trimsaran,  four  miles  from 
Llanelly,  the  court  held  it  to  be  void  and  inadmissible  in  evidence,  (e) 

So,  where  a  cheque  was  given  and  dated  at  Frome,  and  drawn  on 
London  bankers,  Lord  Ellenborough  said,  "The  cheque  was  void  in 
its  creation.  It  is  a  mere  blank.  I  have  not  legal  optics  to  see  its 
existence. "(/) 

Where  the  date  was  the  following, — "Dorchester  Old  Bank;  estab- 
lished 1786,"  which  words  were  in  print,  and  there  was  no  day  of  the 
month  and  year  marked  on  the  cheque,  as  the  time  at  which  it  was 
issued,  and  the  cheque  was  unstamped,  and  the  objection  was  taken  that 

(c)  Beames,  Lex  Merc.  p.  563,  pi.  3,  edit.  1813  ;  Com.  Dig.  Merchant,  F.  5.  But 
a  document  may  be  an  order  for  the  payment  of  money  within  the  enactments 
against  forgery  without  being  addressed,  if  it  can  be  shown  by  evidence  to  whom 
it  was  intended  to  be  addressed.  Reg.  v.  Snelling,  23  L.  J.,  M.  C.  8  ;  and  see  case 
put  by  Jervis,  C.  J.,  S.  C. 

(d)  This  exemption  is  continued  by  the  schedule  of  16  &  17  Vict.  c.  39,  but  that 
schedule  omits  the  words  ''or  any  person  or  persons  acting  as  a  banker,"  and  there- 
fore confines  the  exemption  to  cheques  drawn  upon  actual  bankers  ;  cheques  drawn 
on  a  banker,  payable  to  order  on  demand,  appear  to  be  subjected  by  that  act  to  a 
stamp  duty  of  one  penny.  See  sects.  3  &  4  and  schedule.  As  to  cancelling  the 
stamp,  &c,  before  issuing,  &c,  sect.  4.  Drafts  payable  to  bearer  or  to  order,  at 
any  time  otherwise  than  on  demand,  are  to  be  stamped  according  to  scale  in  sche- 
dule to  stat.  IT  &  18  Vict.  c.  83. 

(e)  Waters  v.  Brogden,  1  Y.  &  J.  462  ;  see  R.  v.  Pooley,  3  B.  &  P.  312. 

(/)  Borrodaile  v.  Middleton,  2  Campb.  55  ;  see  Rex  v.  Pooley,  3  Bos.  &  P.  311, 
decided  when  the  limit  was  ten  miles  from  the  banking  house. 
January,  1857. — 5 


.  A  N  I    0  N    I  II  B    L  A  \S     1 1  T    B  A  S  K  [KG 
. -trvmi.  lit  WM  v< .i.l   00    that    acciint,  because   the  place  of  issuing 

aot  sufficiently  specified,  the  court  decided  tliat  tin-  above  date 
,  sufficiently  snowed  t hat  the  cheque  was  issued  at  *Dorohaster 
l      ''-J  (which  was  the  case)  as  it  had  that  word  upon  its  face,  and  that 
the  other  words  did  oo  hurt.^  ) 

When  i  oheque,  being  drawn  by  the  finance  committee  of  a  railway 
company,  was  headed  with  the  statutory  name  of  the  railway  company, 
but  was  not  dated  as  drawn  at  any  place,  it  was  held  to  bear  no  sufficient 
indication  of  the  place  at  which  it  was  drawn  to  satisfy  the  Stamp  Act, 
and  therefore,  l>^-i mr  unstamped,  t> »  be  v<iid.(/) 
A  cheque  drawn  in  this  form: — 

October  12,  1847. 
ME88B&  Kv\ii'  A  Co.  Bankers,  Abingdon — Payto  Mr    Hicks,  or 
bearer,  one  hundred  and  seventeen  pounds  seventeen  shillii 

6117,  17.-.  Od  Thomas  Sharps. 

I  in >t  to  Bhow  sufficiently  the  place  were  the  same  was 

1,  to  satisfy  the  exemption  in  the  stat.  9  Geo.  IV.  o.  4!),  s.  15,  so 

that,  being  unstamped,  it  was  inadmissible  in  evidence,  for  the  defend- 

!i  an  issue  joined  on  hie  plea  of  delivery  to  and  acceptance  by  the 

plaintiff  of  a  banker's  cheque  in  full  satisfaction  and  discharge  of  the 

debt  claimed. (y) 

The  delivery  of  a   cheque,  without  the  place  at  which  it  was  drawn 

ted  en  it,  does  not  amount  to  payment,  unless  stamped;  and 

fore,  where  the  vendor  of  land  had  taken  Buch  a  cheque  ou  account 

of  the  purchase-money,  but  had  not  had  cash  f<>r  it  at  the  hanker-'  before 

topped  payment,  he  was  held  in  equity  to  have  a  lien  on  the  estate 

for  the  same.(A ) 

The  results  OI  what  has  been  Mated  are  these;   whenever  a  cheque  is 

I  fifteen  miles  <>r  upwards  from  the  hanker'.-  place  <»f  business  it 
mii-t  be  stamped. (t) 

It  must  also  be  stamped  although  issued  within  the  fifteen 

'         J   miles,    unless   all    the    three    provisoes    above   mentioned   are 

thai  is,  unless  it  hears  the  name  of  the  place  where  it  was 

•!.  and  the  date  of  a  day  I'll  cir  before  the  day  on  which  it  was  issued, 

and  do  not  direct  the  payment  of  the  sum  mentioned  in  it  to  be  made 

in  bills  or  promissory  notes.(&) 

In  what  mode  the  fifteen  miles  arc  to  be  measured  has  not  been 
dec; ;  a  late  statute  says  the  distance  is  to  be  fifteen  miles 

in  a  direct  line  from  the  hank.  &c 

| 
i.  :  .  W  '  ompany,  -  De  <;.  M.  k  ('•.  160 

Bopart  v.  li  a.  l. 

.         Wnr.i-ii.   1   Cell.  .')83. 

nder  the  traverse  of  the  allegation  that  defend- 
it  i-  nut  to  in-  pleaded  Bpecially.    M'Dowell  v.  Lyster,  2  M 

'■'■ 
<..  o.  III.  < .  184,  Bchedole,  |>t.  L;9&  o.  IV.  c.  49,  s.  15:  see  Stoker  \ 
l.  .1  .  0.  B.  141. 
3cn   •  r  ■.  hi-  eaaea  ol  reckoning  of  distances  under  statutes,  Grant's  Cor- 


CHEQUES.  40 

Also,  the  person  on  whom  the  cheque  is  drawn  must  be  an  actual 
banker :  it  will  not  suffice  that  the  drawer  treats  him  as  his  banker 
pro  hac  vice,  if  in  truth  the  drawee  does  not  follow  the  business  of  a 
banker,  (nij 

However,  it  has  been  decided  that  an  unstamped  cheque  drawn  beyond 
the  legal  limit,  though  inadmissible  in  evidence  to  discharge  the  banker, 
is  admissible  to  prove  the  receipt  of  money  by  means  of  it,  as  part  of 
the  res  gestce.(n) 

Again,  an  unstamped  cheque,  of  a  character  to  require  a  stamp,  and 
therefore  void  for  want  of  one,  might  be  given  in  evidence  in  such  a 
ease  as  the  following : — In  an  action  of  debt,  with  plea  of  payment,  the 
plaintiff  might  prove  his  case  by  means  of  a  document  in  which  the 
defendant  had  admitted  the  debt  claimed,  but  went  on  to  allege  that  he 
had  paid  it  by  a  cheque,  &c,  and  would  be  allowed  to  use  in  evidence 
the  unstamped  cheque  to  negative  the  alleged  payment,  (o)  The  produc- 
tion of  the  cheque  is  here  obviously  allowed,  not  for  the  purpose  of 
enforcing  it  as  a  valid  subsisting  instrument  valuable  to  the  extent  of 
the  sum  for  which  it  purports  to  be  drawn,  but  as  the  means,  and  the 
*only  means,  of  establishing  its  nullity  for  want  of  a  stamp  ;  and  .-  *yj-i 
therefore  the  admission  of  it  is  in  strict  conformity  with  the  L  J 
meaning  of  the  stamp  acts. 

And  now,  by  17  &  18  Vict.  c.  83,  s.  7,  every  one  is  forbidden  to 
remit,  or  send,  or  receive  in  a  payment,  a  cheque  unstamped,  to  or  at  a 
place  beyond  the  distance  of  fifteen  miles  in  a  direct  line  from  the  bank 
at  which  it  is  made  payable,  or  in  any  manner  to  negotiate  or  circulate 
the  same,  under  a  penalty  of  50?. 

Next,  as  to  the  day  of  the  date. 

The  day  mentioned  may  be  any  day  before,  or  the  day  when,  the 
cheque  was  issued.  The  cheque  must  not  be  post-dated  ;(jp)  that  is,  it 
must  not  bear  date  on  a  day  after  that  on  which  it  was  in  fact  issued. 
For  it  is  enacted,  that  if  any  person  shall  make  or  issue  any  cheque  or 
draft  on  a  banker,  payable  to  bearer  on  demand,  not  duly  stamped,  and 
not  falling  in  every  respect  within  the  above  exemption,  the  drawer  shall 
forfeit  100?. ;  any  person  knowingly  taking  it,  20?. ;  the  banker  know- 
ingly paying  it,  100?. ;  and  the  banker  shall  not  be  allowed  it  in  account 
against  the  persons  by  whom  or  for  whom  it  was  drawn,  or  against  any 
person  claiming  under  them  respectively.^) 

Therefore,  unless  it  be  duly  stamped,  a  post-dated  cheque  is  void,  and 
the  parties  concerned  in  giving,  receiving  and  cashing  it,  are  liable  as 
above  under  the  circumstances  there  stated.  This  is  the  case,  although 
the  post-dated  cheque  was  not  intended  to  be  used  until  the  day  of  the 

(m)  Castleman  v.  Ray,  2  Bos.  &  P.  383. 

(n)  Blair  v.  Bromley,  11  Jur.  617;  see  Keable  v.  Payne,  8  A.  &  E.  555. 

(o)  Smart  v.  Stokes,  6  M.  &  Gra.  911. 

(p)  Allen  v.  Keeves,  1  East,  435 ;  Whitwell  v.  Bennett,  3  Bos.  &  P.  559. 

(q)  55  Geo.  III.  c.  184,  s.  13,  which  semb.  first  made  illegal  the  post  dating  of 
a  cheque.  The  defence  of  post  dating  may  be  taken  in  an  action  on  the  cheque, 
under  the  traverse  of  the  making.  Field  v.  Woods,  6  Dowl.  23.  So^  that  cheque 
made  more  than  fifteen  miles,  &c.  M'Dowall  v.  Lyster,  2  M.  &  W.  52  -T  Jenkins  v. 
Creech,  5  Dowl.  293. 


OR  A  H  T    0  R    T  II  E    I.  A  W    0  FDA  N  K  I  X  Q . 

it  i<  void  altogether,  even  against  a  bonajidi  holder.(r)     Tn 

,  *fact,  in  scaroely  any  instance,  is  a  post-dated  cheque  intended 

I         it.,  I.,-  used  1m  fore  the  day  of  the  date  ;  the  object,  in  delivering 

such  an  instrument,  i-  tn  create  a  security  till  the  day  cm  which  the 

cheque  is  available. 

The  following  are  illustrations  of  the  above  positions. 

a  post-dated  cheque,  knowing  it  t><  be  so,  and  also  know- 
ing that  the  maker  was  insolvent,  presents  tn  a  banker,  who  heing 
ignorant  of  these  oircumstano*  s,  pays  the  cheque  for  the  honour  of  the 
drawer:  the  hanker  recovered  from  the  payee  the  whole  amount  of  the 
ehequi 
The  public  officer  ol  a  banking  co-partnership  under  7  <ieo.  IV.  c. 
;•  -  nil  a  promissory  note  of  defendant's.  A  plea  that  the  consi- 
deration wa<  cash  paid  by  the  plaintiff's  hank  on  cheques  made  more 
than  fifteen  mih-s  from  their  place  of  business,  &c,  was  held  had.  after 
pleading  over,  for  want  of  allegation  that  the  cheques  were  payable  to 
bearer,  and  payable  on  demand,  ot  that  the  amount  of  any  one  of  them 

""•(0 

A  cheque  i-  not  issued  till  it  is  in  the  hands  nf  a  third  party  entitled 
to  demand  cash  for  it  ;  therefore  where  a  person,  having  credit  with  a 
hanker,  received  money  from  the  agent  nf  the  bank,  and  every  week 
that  agent  an  unstamped  cheque  <>n  the  bank  for  the  amount 
advanced  during  the  week,  which  the  agent  sent  to  the  bank  as  a  voucher 
for  himself,  and  this  cheque  was  drawn  more  than  the  limited  distance 
from  the  hank,  and  post  dated;  it  was  held  to  come  within  the  excep- 
tion, this  oot  being  an  issuing  within  the  meaning  nf  the  statute. (m) 

It  must  be  proved  that  the  hanker  cashed  the  cheque,  with  the  full 
,  knowledge  that  it  was  issued  in  the  prohibited  manner,  *hefore 
L  '  -J  le  can  be  made  liable  to  the  above-mentioned  penalty  fnr  know- 
ingly paying 

It  will  1m-  observed  that  the  cheque  is  required,  by  the  statute,  to  be 

made  payable  tn  bearer  on  demand;  it  does  not  however,  follow  that  it 

need  contain  the  words  "»  rf<  mand  on  the  face  nf  it ;  fnr  if  made  payable 

srer,  that  makes  it  in  law  payable  on  demand  ;(y)  hut  a  cheque  ex- 

■••  '..  0  If.  .-.  W.  '  7  A.  4  K.  Hi:  Steadman 

supporting  Field  v.  Woods;   Demi  \.  Warden,  l  foil. 
Ex  parte  Bignold,  l  i 

B.  Moore,  635.     [n  Ponlton  v.  Watson,  15  Jnr.  1112, 
ol  void,  and  that  it'  a  banker  paj 
without  knowing  "i  the  false  date,  the  payment  is  pood. 

.  Iday,  l  '..  Geo.  III.  c.  18  i.  -.  13  :  9  Geo.  IV. 

tl(  !■!.  II'' 

Ex  parte  I  Di  In  a  caw  which  occurred  before  the  statute, 

ontrary  t<>  tie-  usage  ol  London  bankers  tn  pay  a  cheque  be- 
te, and  tii-  nker,  who  had  so  cashed  a  cheque  that 
pay  tin-  amount  i<>  tin-  party  who  had  lest   the 
Da  Silvfl  '■ .  Puller,  cited  in  Chitt.  Bills.  148:  and  per  Parke.  BM  7  .M.  A: 

Whitlock  v.  rjndenrood,  2  V..  k  <'.  157  :  East  v. .  2  Man.  k  R.  8. 

11  not   presume  that  a  draft  on  a 


CHEQUES.  51 

pressed  to  be  payable  "at  sight"  is  not  with  the  exemptions 5(2)  nor  is 
a  cheque  not  payable  to  bearer ;(«)  and  if  payable  to  A.  on  demand, 
without  the  words  "  or  bearer,"  it  is  not  payable  to  bearer.(i) 

A  cheque  or  draft  on  a  banker  does  not,  ex  vi  termini,  mean  an  instru- 
ment payable  on  demand. 

There  is  no  objection  to  dating  a  cheque  on  a  Sunday,(c)  though  it  is 
needless  to  say,  it  must  not  be  presented  on  a  Sunday,  as  to  do  that 
would  not  be  in  compliance  with  the  general  rule,  that  cheques  are  to  be 
presented  in  banking  hours. 

We  may  add,  in  further  elucidation  of  this  part  of  our  subject,  as 
showing  the  complete  invalidity  of  cheques  issued  and  paid  in  defiance 
of  the  statutes,  the  following  case  decided  on  a  question  arising  out  of 
the  Scottish  system  of  *banking,  under  which  what  is  called  a  f  ;f.9n  -, 
cash  credit  is  opened  at  the  bank,  which  gives  the  party  in  whose  L  "  J 
favour  it  is  granted,  the  right  of  drawing  cheques  upon  the  bank  to  the 
extent  of  the  credit,  he  finding  security.  In  the  case  in  question  the 
customer  of  the  bank  drew  upon  them  at  a  place  beyond  the  limited  dis- 
tance (his  cheques  being  falsely  dated  at  a  place  within  that  distance ;) 
the  cheques  were,  also  post-dated ;  the  House  of  Lords  decided  that  the 
bankers,  being  cognizant  of  the  mode  of  drawing,  could  not  recover  from 
the  customer's  surety  upon  his  bond  the  amount  paid  upon  these  cheques, 
no  debt  having  been  in  law  incurred  by  the  customer  to  the  banker.(c?) 

A.  signs  an  order  on  his  bankers,  directing  them,  out  of  the  balance 
due  to  him  on  the  final  arrangement  of  his  account,  to  pay  to  B.  a  cer- 
tain sum ;  he  delivers  this  order  to  B.,  and  accompanies  him  to  the  bank. 
The  circumstance  of  the  delivery  to  the  payee  rendered  necessary  a  bill 
stamp  under  55  Geo.  III.  c.  184. (e) 

3.  The  Cheque  must  contain  the  Sum  to  be  paid,  which  must  not  be 
under  Twenty  Shillings. — The  relation  between  a  banker  and  a  person 
who  deposits  money  in  his  bank  being  simply  that  of  a  debtor  to  a  credi- 
tor, to  the  amount  deposited,  which,  by  the  usage  of  bankers,  the  banker 
is,  at  all  times,  bound  to  pay  out  again  to  the  customer  upon  his  cheques 
under  his  hand,  until  the  whole,  minus  the  banker's  commission,  is  ex- 
hausted, provided  the  cheques  are  presented  within  banking  hours  :  it 
follows,  that  the  payments  cannot  be  required  by  the  drawer  of  the 
cheque  to  be  made,  in  any  other  mode,  than  that  in  which  an  ordinary 
debtor  can  be  required  to  pay  an  ordinary  debt,  that  is  to  say,  in  English 
money  only.     The  banker  is  not  a  bailee,  who  is  bound  to  return  in  specie 

banker  is  payable  on  demand.  Abbott  v.  Douglas,  1  C.  B.  491  ;  see  Rogers  v. 
Drake,  2  B.  &  B.  19  ;  Ruuiball  v.  Murray,  3  T.  R.  298  ;  Ex  parte  Mitchell,  2  East, 
140.  if  1  > 

(z)  J' Anson  v.  Thomas,  cited  Byles,  Bills,  42,  reported  3  Dougl.  421. 

(a)  R.  v.  Yates,  1  Car.  Crim.  L.  273;  S.  C,  Ry.  &  Mood.  C.  C.  170.  A  void 
cheque  may  be  subject  of  larceny.  Reg.  v.  Perry,  1  C.  &  K.  725 ;  see  Reg.  v. 
Watts,  23  L.  J.  (N.  S.)  Mag.  C.  56.  So  may  a  cancelled  cheque.  Reg.  v.  Watts, 
2  Dears.  C.  C.  14. 

(b)  Cheethani  v.  Butler,  5  B.  &  Ad.  837  ;  Dixon  v.  Chambers,  1  C.  M.  &  R.  845. 

(c)  Begbie  v.  Levy,  1  Cro.  &  J.  180. 

(d)  Swan  v.  Bank  of  Scotland,  10  Bligh,  N.  S.  627;  S.  C,  3  Cla.  &  F.  610;  the 
reports  differ  somewhat. 

(e)  Parsons  v.  Middleton,  6  Hare.  261. 


-.   .         H      i  H  B     I- AAV     OF     IAN  K  INC. 

-     r  other  *form  of  money  deposited,  upon  demand; 

L    ~    J  therefore,  although  one  thousand  pounds  have  been  deposited 

with  him  in  gold,  In-  i-  not  bound  to  return  gold  in  paymeni  of  cheques 

•   it ;  any  cheque  whioh  may  be  presented  will  be  duly 

red  by  paying  it  in  whatever  form  a  legal  tender  of  payment  of  a 

the  particular  amount  specified  in  the  cheque,  may  be  made. 

\  m  a  cheque  for  less  than  twenty  shillings  i-  absolutely  void,  and 

itiatingsuoh  instrument  renders  liable  to  a  penalty  of 

.  ;:  is  a  statutory  offence  to  utter  a  cheque  on 

which  less  than  twenty  shillings  remains  due.{ /) 

Also,  for  a  considerable  period,  an  enactment  stood  on  the  statute  book, 
which  made  the  drawing  of  a  cheque  for  any  sum  under  51.  illegal;  but 
this  has  hem  altered,  and  there  can  be  do  doubt  nowfa)  that  cheques 
may  be  drawn  for  any  sum  above  twenty  shillings;  though,  perhaps,  it 

-till  may  be  illegal   to  Utter  a   cheque  upon  a  banker  for  a  less  sum  than 
.")/.  when  the  drawer's  account  does  col  show  a  balance  in  his  favour; 

and     '  old    QOt  be    liable  to  the  drawer  for   refusing   to 

-11. -h  cheque. 
Thru,  for  any  Mini  above  twenty,  and  not  exceeding  forty  shillings,  a 
r  of  payment  of  a  cheque  in  Bilver  would  be  good,  because  any 
tender  up  to  forty  shillings  made  in  silver  is  good/A)  in  ordinary  cases  of 
debt 

Al  and  up  to  and  including  5?.,  Lr<>ld  appears  to  be 

illy  legal  tender;  for,  as  will  be  seen  presently,  it  is  only  in  case  of 
sums  above  bl.  that  Dank  of  England  notes  are  at  present  a  legal  tender, 
and  a  banker  would  be  justified  in  paying  cheques  accordingly. 

,  ,      With  reaped  to  Bums  above  •">/..  the  following  is  the  subsisting 

""  J  "law.  :;  \  4  Will.  IV.  o.  '-,v.  s.  6, — ••  A  tender  of  a  note  or  notes 

of  the  Governor  and  Company  of  the  Hank  <>t'  England,  expressed  to  be 

le  t"  bearer  on  demand,  shall  be  a  legal  tender  to  the  amount  expressed 

in  mch  note  <>r  DOteS,  and  shall  be  taken  to  be  valid   BS  a  tender  to  BUoh 
amount,  for  all   sums    abpve  five   pound-,  on  all   occasions  on  which   any 

r  of  money  may  be  legally  made,  so  long  as  the  Bank  of  England 

shall  continue  to  pay  "ti  demand  their  said  notes  in  legal  coin  ;    provided 
always,  that  no  Buoh  note  or  cotes  shall  be  deemed  a  legal  tender  of  pay- 
ment by  the  Governor  and  Company  of  the  Bank  of  England,  or  any 
branch  bank  ol  the  said  Governor  and  Company;  but  the  said  Governor 
and  Company  are  not  to  become  liable  or  be  required  to  pay  and  satisfy  at 
ranch  hank  of  the  said  Governor  and  Company,  any  note  or  m>t>  lof 
the  Governor  and  Company  not  made  specially  payable  at  such  branch 
hank;  but  th>-  .-aid  Governor  and  Company  shall  be  liable  to  pay  and 
the  liauk  of  England  in  London,  all  notes  of  the  said  Governor 
and  Company,  or  of  any  branch  thereof."' 
Therefore  a  cheque  for  100/.  may  be  cashed  at  any  bank,  but  the 
f  England,  or  one  of  its  branch  hank-,  iii  the   following  manner, 

Geo.  Ill  (:l)  it  k  16  Vict.c  83,  s.  fl. 

tender  of  a  debt  in  copper  is  not  good  beyond 
l  Bla.  Com.  277 ;  considering  that  fourpenny  and  three- 

■ 


CHEQUES.  53 

without  the  banker  incurring  liability,  for  refusing  to  honour  the  cheque, 
or  otherwise.  He  may  pay  40s.  in  silver ;  he  may  and  must  pay  the 
next  8/.  in  gold ;  the  remaining  95£.  he  may  pay  in  gold  or  Bank  of 
England  notes,  "expressed  to  be  payable  to  bearer  on  demand,"  which 
therefore  must  not  be  made  specially  payable  at  a  branch  bank,  it  is 
apprehended,  but  must  be  the  ordinary  Bank  of  England  notes,  payable 
at  the  Bank  of  England  in  London,  otherwise  the  payee  of  the  cheque 
might  refuse  them,  and  the  drawer  might  recover  damages  in  an  action 
against  the  banker,  for  refusing  to  honour  his  cheque. 

A  depositor's  cheque  must  be  paid  at  the  Bank  of  England,  or  one  of 
its  branch  banks,  in  gold,  for  sums  above  40s.,  if  he  chooses  to  insist 
upon  it,  provided  the  whole  amount  ^demanded  above  40s.  can  .-^  ,.„  -. 
be  expressed  in  gold  coin ;  thus,  21.  10s.  can  be  paid  with  a  half  L  ~  J 
sovereign  and  40s.  in  silver;  21.  5s.,  with  a  half  sovereign  and  35s.  in 
silver. 

If  the  above  be  correct,  it  will  follow  that  a  customer  who  draws  a 
cheque  for  100?.  on  his  banker,  or  the  bearer,  can  only  demand  3/.  of  it 
to  be  paid  in  gold ;  and  so  of  any  cheque  for  a  greater  sum  than  100 I.  ; 
and  the  same  is  obviously  the  case  of  any  smaller  sum  down  to  bl.,  and 
and  so  mutatis  mutandis  of  sums  under  51.  and  above  20s.  The  almost 
uniformly  practised  custom  of  bankers  to  consult  the  pleasure  of  the 
payee  or  bearer,  as  to  how  he  wishes  to  have  the  cash  paid  over  to  him,  is 
merely  a  matter  of  courtesy,  and  in  no  respect,  except  as  above  mentioned, 
obligatory  on  them. 

A  cheque  must  not  be  expressed  in  foreign  money,  as  dollars,  rupees, 
francs,  rubles,  &c,  both  because  it  is  no  part  of  the  banker's  implied(i) 
contract  with  his  customer,  or  of  his  duty  of  debtor,  to  pay  the  debt  in 
any  but  the  known  and  current  money  of  England ;  it  is  no  part  of  his 
implied  contract  to  insure  the  customer  that  he  shall  always  find  lying 
at  the  bank  a  sufficient  number  of  the  foreign  coins,  &c,  to  meet  the 
amount  specified  in  the  cheque,  nor  to  procure  them,  whatever  may  be 
the  state  of  the  exchanges,  &c,  and  because  it  is  not  according  to  the 
law  merchant  or  the  usage  of  bankers,  that  cheques  should  be  drawn  in 
other  terms  than  in  the  money  of  account  of  England,  and  because  every 
debt  ought  to  be  demanded  in  a  known  denomination  of  money. (k) 

The  money  of  account  of  England  is  expressed  in  pounds,  shillings, 
pence  and  farthings ;  accordingly  £.  s.  d.  is  taken  in  law  to  mean  Eng- 
lish money ;  pounds,  shillings,  pence ;  and  not  foreign  money,  as  ex.  gra. 
livres,  sous,  deniers.(A 

*By  agreement  between  the  drawer  and  banker,  his  cheque  r  ^0 .  -. 
may  direct  payment  to  be  made  in  bills  of  exchange  or  promis-  L  ""  J 
sory  notes,  but  any  cheque  which  does  so  is  void,  unless  duly  stamped, 
by  virtue  of  the  proviso  in  the  55  Geo.  III.  c.  184,  Schedule,  part  1. 

(i)  Of  course  such  a  special  contract  may  be  made  between  the  banker  and  a 
customer  or  other  person,  but  the  order  for  such  payment  would  not  be,  it  is  con- 
ceived, a  cheque  in  law.     See  Parker,  R.  45. 

(k)  Rastell  v.  Draper,  Yelv.  80  ;  S.  C,  Moo.  775  ;  Cro.  Jac.  88. 

(I)  Per  Abbott,  C.  J.,  Kearney  v.  King,  2  B.  &  A.  303  ;  and  see  per  cur.  Sprowle 
v.  King,  1  B.  &  C.  18;  Pierson  v.  Pounteys,  Yelv.  135. 


QBAHT  OH  THE  LAW  nF  BANKING. 

I  '    the  other  hand,  ■  banker  cannot  discharge  himself  from  liability 

on  •  customer's  cheque  by  tendering  payment  in  any  other  money  than 

English  current  money,  or  in  anj  other  form,  denomination,  or  quantity 

h  denomination,  than  such  as  a  tender  of  a  debt  may  legally  be 

made  in.i  »<  i 

Formerly  it  was  not  anusual  to  add  in  bills  and  mercantile  contraota 
of  :ill  kinds  in  which  money  was  mentioned,  the  words  "lawful  money 
of  the  realm,"  or  some  term  of  that  effect,  ex.  gra.  the  word  sterling, 
which  means  current  money  ;(n)  but  though  these  and  all  similar  words 
■  ow  usually  omitted,  yet  cheques  will  not  be  intended  to  mean  any 
other  than  current  money;  and  if  the  huh  in  the  body  differs  from  that 
in  the  margin,  the  sum  in  the  body  is  the  sum  which  the  banker  ought 
■  (") 

Hence,  and  from  what  has  been  just  Btatod,  a  oheque  in  the  body  of 
which  the  Bum  was  expressed  only  in  figures,  with  the  letters  £.  s.  d. 
[thus,  £100  :  10s.  8rf.]  could  not  legally  be  refused  payment  by  a  banker 
having  assets  in  his  hands,  and  Buch  a  cheque,  purporting  to  bear  date 
at  a  place  in  France,  and  properly  stamped  and  duly  presented,  would  be 
valid  and  binding  on  all  parties  for  the  expressed  amouut  in  English 
mom 

But  t"  prevent  mistakes,  and  to  render  frauds  less  easy,  the  form  given 

.  in  which  the  sum  is  twice  Btated,  once  in  words,  and  a  second 

time  in    figures,  with    the    above    letters    attach,  d,  is   the  one   in   general 

ad  ought  always  to  be  adopted.     For  although  the  Court  would 

prevent  a  merely  obvious  omission  or  slip  from  being  turned  to 

t         J  the    prejudice  of  any  one  connected  with  the  cheque,  as,  forin- 

.  if  a  cheque  were  drawn  for  ■•  twenty-live,  seventeen  shillings 

and  three  pence/1  it  would  be  held  to  mean  twenty-five  pounds  sterling, 

and  seventeen  shillings  and  three  pence  \( />)  yet  in  case  of  a  fraudulent 

alteration  of  the  cheque,  it'  the  question  which  of  the  two  innocent  parties, 

the  drawer  or  the  banker,  i-  to  bear  the  loss,  arises,  it  must  be  answered 

by  resolving  the  liability  to  be  on  that  party  whose  conduct  lias  opened 

tie-  opportunity  for  the  accomplishment  of  the  fraudulent  design;  and 

the  loss  must  rest  with  one  or  the  other  accordingly. 

The  following  instances  may  be  useful: — 

A  customer  of  a  hanker,  on  leaving  home,  intrusted  to  his  wife  several 

blank  forms  of  cheques,  signed  by  himself,   and   desired  her  to  lill  them 

up  according  to  the  exigency  of  his  business.  She  filled  up  one  with 
the  words, fifty-two pounds  two  shillings,  beginning  the  word  fifty  with 
a  -mall  letter  in  the  middle  of  a  line.  The  figures  52:  2  were  also  placed 
ut  a  considerable  distance  to  the  right  of  the  printed  *.'.  She  gave  the 
cheque  thus  filled  op  to  her  husband's  olerk,  to  get  the  money.  He, 
ting  it.  inserted  the  words  three  hundred  before  the  word 
fifty,  ami  the  figure  3  between  the  printed  £  and  the  figures  52  :  2,  so 
that  it  then  appeared  to  be  a  oheque  for  £352,  2s.     It  was  presented, 

■  .  '■  I:,  p   1 1  ;  &;  Oo   l.itt.  2<M  b. 
Wiltahalgi  • .  i  Leon.  41. 

:  on  v.  Piper,  5  Bing.  N.  < ' 
Pbippt  \.  ;  C.J 


CHEQUES.  55 

and  the  bankers  paid  it.  Held,  that  the  improper  mode  of  filling  up 
the  cheque  had  invited  the  forgery,  and  therefore  that  the  loss  fell  on 
the  customer,  and  not  on  the  banker.^)  Perhaps,  however,  it  would 
not  be  safe,  according  to  later  decisions,  to  rely  on  this  decision  as  stat- 
ing the  law,  except  as  applicable  in  precisely  the  same,  or,  at  least,  very 
closely  analogous  circumstances.  Thus,  if  the  cheque  had  been  originally 
filled  up,  for  fifty-two  pounds  two  shillings,  as  well  as  signed,  in  the 
customer's  handwriting,  the  rest  of  the  circumstances  remaining  the 
same,  it  would  *seem  that,  as  bankers  have  been  held,  in  general,  .-  ^q  -i 
to  be  presumed  to  know  their  customer's  handwriting  and  what  L  '  J 
is  not  his  handwriting,(r)  and  to  be  liable,  if  they  pay  a  cheque  that  is 
not  genuine,  in  all  other  respects,  as  well  as  the  signature,(r)  they  would 
have  been  bound  to  have  taken  notice  that  the  words  three  hundred  were 
not  in  the  customer's  handwriting,  and  that  they  ought  to  have  made 
inquiries  before  cashing  the  instrument  in  those  circumstances,  and 
therefore,  not  having  done  so,  were  responsible,  (s) 

And  where  bankers  cashed  a  cheque  of  a  customer  which  had  been 
altered,  but  not  so  as  to  be  obviously  perceptible,  to  a  larger  sum  than 
the  customer  drew  it  for,  there  it  was  held  to  be  the  conduct  of  the 
banker,  in  not  observing  the  alteration,  that  gave  the  means  of  accom- 
plishing the  fraud  of  the  third  party,  and  that,  therefore,  of  the  two 
innocent  parties,  the  banker  and  the  drawer  of  the  cheque,  it  was  on  the 
former  that  the  loss  of  the  overplus  beyond  what  the  cheque  was  really 
drawn  for,  ought  to  fall.(tf)  And  so,  where  there  is  no  fraud,  a  corres- 
ponding rule  holds;  the  party  whose  conduct  led  to  the  loss  must  bear  it. 

As  where  a  cheque  has  been  casually  lost  out  of  the  possession  of  a 
persoD  to  whom  it  had  been  delivered  in  payment  of  a  debt,  and  another 
person,  takes  it  bona  fide  for  a  full  consideration,  of  these  two  innocent 
parties  the  loss  must  fall  upon  the  former ;  and  the  latter,  upon  being 
refused  payment  by  the  bankers,  who  had  been  ordered  by  the  drawer, 
after  the  loss,  not  to  pay  it,  may  recover  the  amount  from  the  drawer ;(«) 
and  the  same  would  be  the  case  if  the  equities  were  equal;  for  melior 
est  conditio  possidentis. (x) 

(q)  Young  v.  Grote,  4  Bing.  253. 

(r)  See  per  Pollock,  C.  B.,  Bellamy  v.  Majoribanks,  21  L.  J.,  Exch.  73  ;  and  per 
Bayley,  J.,  Hall  v.  Fuller,  5  B.  &  C.  750;  see  Coles  v.  Bank  of  England,  10  A.  &E. 
449. 

(s)  See  Robarts  v.  Tucker,  16  Q.  B.  560,  the  principle  of  which  case  seems  to 
apply  to  cheques. 

ft)  Hall  v.  Fuller,  5  B.  &  C.  750. 

(m)  Grant  v.  Vaughan,  3  Burr.  1525,  1526;  and  see  per  Lord  Kenyon,  C.  J.,  3 
T.  R.  177,  182. 

(x)  Per  Wilmot,  J.,  S.  C,  3  Burr.  1526  ;  see  also  Willet  v.  Chambers,  Cowp. 
814  ;  Bond  v.  Gibson,  1  Campb.  185.  In  equity  the  principle  holds,  that  a  creditor 
may  by  an  order  on  his  debtor  effectually  assign  his  debt  to  a  third  person ;  there- 
fore, in  all  cases  of  valid  cheques,  it  seems  the  bearer  might  recover  in  equity 
against  the  banker  if  necessary.  Rodick  v.  Gandell,  12  Beav.  325.  Thus  in  cir- 
cumstances such  as  the  above,  if  Vaughan  had  become  bankrupt  after  the  present- 
ment to  and  refusal  by  the  bankers,  then,  upon  showing  that  the  bankers  had  as- 
sets in  their  hands  at  the  time  of  the  presentment  to  satisfy  the  amount,  it  seems 
they  would  have  been  liable  in  equity  to  Grant,  for  Vaughan  had  no  right  to  order 
them  not  to  pay  the  cheque,  at  least  that  circumstance  could  be  their  only  ground 


ANT    0  N    THE    L  A  W     0  F    B  A  NKIXii. 

A.  -.,   Cheques  made  payabk  to  Order  on  Demand. — With 

I  rospeot  to  the  subject  of  indorsed  cheques,  it  has  been  enaoted(y) 

••that  any  draft  or  order  drawn   apon  a  banker  tor  a  sum  of  money 

order  on  demand,  which  shall,  when  presented  for  payment, 

purport  to  be  indorsed  by  the  person  bo  whom  the  same  shall  be  drawn 

ile,  shall  be  a  sufficient  authority  to  such  hanker  to  pay  the  amount 

of  such  <lrat"t  <>r  order  to  the  bearer  thereof;  ami  it  shall  not  lie  incum- 

■  II  Mich  hanker  to  prove  that  .<uch  indorsement,  or  any  subsequent 

indorsement,  was  made  by  or  under  the  direction  or  authority  of  the 

i  to  whom  the  said  draft  or  order  was  or  is  made  payable,  either  by 

[rawer  or  any  indorser  thereof." 

Notwithstanding  this  statute,  however,  it  would  probably  not  be  safe 

for  banker-  to   pay  a  cheque,  purporting  to  be  drawn  by  a  customer  and 

I  by  the  payee,  without  ascertaining  the  genuineness  of 
both  signatures,  if  tlt>   customer  had  "t  tin"  of  presentment  and  pay- 

in,  a  t  no  funds  in  tht  ir  hands}  for  it  has  been  held  in  the  analogous  case 

•  if  a  bill,  accepted  by  a  OUStomer  payable  at  his  bankers',  that  they  were 

liable  on  paying  the  bill  fur  his  honour,  not  having  funds,  and  could  not 

r  from  the  customer,  not  having  taken  means  to  ascertain  the  cor- 

reotness  of  the  acceptance  *and  indorsement.^)    The  statute 

L-  J  does  it  appear  to  alter  the  principle  of  this  decision  as  applica- 
ble to  cheques,  as  it  turns  on  the  circumstance  that  the  bankers,  in  the 
:  funds  of  their  customers,  are  nut  bound  to  pay  the  bills,  and 
therefore,  if  tiny  choose  to  do  so,  they  act  under  peril  of  r>  ing  responsi- 
ble, in  ease  the  instrument  turns  out  to  be  vitiated  by  fraud  or  forgery. 
I  ■         !i   only  be    taken,  it  is  submitted,  to  relieve   bankers  from 

the  necessity  of  ascertaining  the  genuineness  (so  as  to  be  able  to  prove 
it  at  the  trial)  of  the  payee's  indorsement,  and  in  cases  where,  inde- 
pendent of  any  consideration  of  the  indorsements,  they  would  be  bound 
I  the  cheque.  The  statute  maybe  considered  as  saying,  "  if,  given 
the  genuin  the  payee's  indorsement.  &c.,  yon  would  by  the  law, 

and  by  the  usage  of  bankers,  be  bound  to  pay,  there  you  shall  be 
relieved  from  the  necessity  of  proving  the  payee's  indorsement,  &c,  and 
shall  be  entitled  to  have  the  benefit  of  such  a  payment,  on  showing  an 
indorsement,  purporting  to  be  that  of  the  payee."  liut  in  the  case 
above  stated,  the  bankers  would  not  be  bound  bo  pay  a  cheque,  without 

first  having  funds  of  the  person  purporting  bo  be  drawer  in  their  hands, 

of  defence.    Bat  however  tail  may  be,  it  la  conceived  to  be  clear  that  in  on  ordi- 

if  the  bearer  of  ■*■  cbeqae  presenting  to  bankers  having  assets  of  the 

•  c  iii  their  bands  at  the  time,  the  bearer  mighl  in  equity  recover  from  them 

the  amoaot    Thej  woald  also  be  liable  at  common  law  to  the  drawer  if  be  bad 

not  Interfered  to  forbid  them  paying. 

L9.     Btai  Stamp  <>n  cheques  for 

paynu  than  on  demand,  17  k  18  Vict.  c.  83,  Sche- 

dule. 

Oampb.  17.    Where  tl  honour  of  the  drawer 

to  payee,  who  pi  payment,  knowing  the  maker  to  be  al  the  time  insol- 

:;  l  the  i  beque  to  be  post-dated,  the  bankers  being  ignorant  of  hoth  circum- 

■  the  obvious  jastii  e  ol  the  case,  recover  back  the 

from  the  payee  Who  ba«  cheated  them  OUt  Of  it     Martin  v.  Morgan,  3  J.  li. 


CHEQUES.  57 

and  without,  secondly,  being  satisfied,  and  therefore  able  to  show,  that  a 
person  purporting  to  be  the  drawer,  and  having  funds  in  their  hands, 
actually  drew  the  cheque  presented  and  paid.  In  other  words  the  statute 
applies  to  cases  of  cheques,  really  drawn,  by  persons  entitled  to  draw ; 
for  such  only  are  drafts  drawn  for  a  sum  of  money,  payable  to  order  on 
demand. 

It  may  be  also  doubted,  perhaps,  whether  in  a  case  where  the  payee 
of  the  cheque  was  also  a  customer  of  the  bankers,  and  so  they  would  be 
presumed  to  know  his  handwriting,  and  what  is  not  his  handwriting,  an 
indorsement  *purporting  to  be  his,  would  be  a  sufficient  autho-  .-  ^q  -i 
rity  to  them  to  pay  the  bearer,  within  the  meaning  of  the  statute,  L  "  J 
if  such  indorsement  were  shown  to  be  not  the  payee's  handwriting,  but 
a  forgery.  The  statute  does  not  apply,  it  will  be  observed,  to  drafts 
drawn  on  a  banker  and  made  payable  to  order  on  demand,  but  to  drafts 
"  for  a  sum  of  money  payable  to  order  on  demand,"  and  the  sum  in  a 
cheque,  such  as  these  above  mentioned,  is  not  payable  (i.  e.}  such  as  it 
is  their  duty  to  pay)  to  order  on  demand. (a) 

The  extent  to  which  a  party  may  insist  that  his  cheque  shall  be  cashed 
in  particular  descriptions  of  money  or  currency,  also  the  extent  to  which 
bankers  are  bound  to  pay  in  particular  denominations  of  coin,  has  been 
stated  above,  but  nothing  that  has  been  said  must  be  understood  to  inva- 
lidate the  power,  which  the  parties  possess,  of  entering  into  any  agree- 
ment to  make  and  receive  the  payment  of  cheques,  by  any  descriptions 
of  valuable  circulating  medium  that  they  choose,  although  such  be  not 
recognized  by  law  as  money. 

Thus,  if  the  bearer  of  a  cheque  requests  or  does  not  object,  at  the  time 
of  payment,  to  receive  payment  in  country  bank  notes,  the  banker  may 
so  cash  the  cheque,  and  the  bearer  cannot  afterwards  object  that  the 
nates  turned  out  to  be  worthless,(i)  provided  that  all  has  been  fair  and 
honest  on  the  banker's  part ;  but  if  there  has  been  any  unfairness  or  fraud 
practised  by  the  banker,  as  if,  when  tendering  them  in  payment,  the 
banker  knew  that  the  bank  which  issued  the  notes  was  in  a  failing  con- 
dition, there  the  notes,  though  not  objected  to  at  the  time,  would  not  be 
a  good  payment,(c)  and  the  banker  would  remain  liable  to  the  drawer  to 
the  full  amount  of  the  cheque,  and  probably  to  damages  for  dishonouring 
it;(d\  for  his  having  induced  or  allowed  the  *bearer  to  take,  as  j-#on  -i 
payment  of  the  cheque,  that  which  he  was  aware  it  was  doubtful,  L   c     J 

(a)  Nevertheless  there  may  be  cases  where  "payable  on  demand"  is  the  same 
as  "  made  payable  on  demand."  See  per  Buller,  J.,  Janson  v.  Thomas,  3  Dougl. 
421. 

(6)  Polglass  v.  Oliver,  2  Cro.  &  J.  5  ;  Vernon  v.  Bouverie,  2  Show.  296. 

(c)  Spurraway  v.  Bogers,  12  Mod.  517. 

(d)  In  Bolin  v.  Steward,  14  C.  B.  595,  which  was  an  action  against  bankers  by 
a  trader  having  assets  in  their  hands  for  dishonouring  three  cheques  amounting  in 
the  aggregate  to  111Z.  13s.,  and  no  special  damage  was  proved,  the  jury  gave  500Z. 
damages.  The  court  in  banc  suggested  that  the  parties  might  relieve  them  from 
giving  any  ultimate  opinion,  but  intimated  they  inclined  to  think  the  damages 
very  large,  whereupon  it  was  agreed  by  the  parties  to  reduce  to  200^.,  and  the 
judgment  was  entered  up  accordingly.  When  the  payee  sues  the  drawer,  he  must 
prove  notice  to  the  drawer  of  the  non-pavment.  Treacher  v.  Hinton,  4  B.  &  A. 
413. 


QRAN1  OM  THE  LAW  OP  BANKING. 

at  least,  whether  it  oould  ever  be  realiied  a-  money,  was  an  injury  to 

the  drawer,  for  which,  though  it  might  be  considered  not  to  wear  exactly 

me  aspect  as  ■  dishonour  by  waj  of  declaration  that  the  drawer  had 

-  in  his  hand,  still  is  prejudical  to  him,  in  this  respect,  thai  he 

is  anneoeasarily  and  without  any  fault  of  his,  obliged  to  pay  the  debt 

again  to  the  creditor  to  whom  he  delivered  tin-  cheque,  as  payment 

of  the  debt  between  them;  and  the  drawn-  of  a  oheque  has  a  right  to  re- 

quire    that    hifi    draft    shall    he    promptly  and    effectually  and    bund  fide 

1  The  ]  lyee  or  bearer  ha-  no  recourse  againsl  tin-  banker,  because 
the  effect  of  tin-  oheque  is  onlj  to  d<  rignate  tin-  hand  to  which  the  bauker 
shall  pay  his  debt  to  drawer,  not  to  constitute  the  banker  the  debtor  of 
the  party  presenting  the  oheque.  Therefore,  in  the  case  of  a  payee 
having  taken  a  cheque  in  payment,  ami  Bending  hi-  servant  to  present 

beque,  tin     oh<  que   being   paid   by  the  banker  as  above,  the    payee 

would  he  enabled,  it  would  seem,  to  conU.  apon  the  drawer  for  the  amount, 

on  the  ground  that  without  fault,  on  his   part,  tin-  original  debt  was  still 

undisoharg  9  .  if  the  cheque  had  passed  through  several  hands  l>c- 

fore  arriving  at  the  party  who  presented  it,  it  Beems  the  bearer  might 
have  recourse  to  the  party  from  whom  he  received  it,  ami  he  to  the  party 

who  paid  it  to  him.  ami  BO  On  till  the  payee  ultimately  would  recover 
from  the  drawer.  On  the  other  hand,  the  payee,  it  might  perhaps  be 
ided,  is  the  only  person  who  is  competent  to  sue  the  drawer,  for 
is  ao  original  privily  between  the  drawer  and  the  mere 
L  J  *bearer,  and  the  circumstance  that  he  direct-  the  banker  to  pay 
the  payee  w  bearer  i-  for  the  convenience  of  the  payee,  and  cannot  form 
a  ground  for  enlarging  the  drawer's  original  liability,  which  is  in  no  wise 
affected,  it  is  apprehended,  by  circulating  the  oheque. 

It  i-  true,  in  the  case  of  a  promissory  note,  payable  to  bearer  on 
ad,  it  has  bet  d  said  the  bearer  is  a  party  to  the  note,  and  may  sue 
the  maker  on  it,  for  the  maker  had  expressly  promised  to  pay  the 
but  it  may  be  questioned  whether  this  doctrine  extends  be- 
yond promissory  note-,  to  which  the  statute  gives  the  same  ijualities  of 
.ability  that  belong  to  bills  of  exchange  by  the  lawT  merchant  ;  but 
neither  a  statute  nor  the  law  merchant  enables  the  parties  to  a  cheque 
on  a  banker  to  annul  the  common  law  prohibition  against  assigning  a 
cho$t  in  iii  tion. 

N   rert         -.it  was  stated  incidentally  by  the  Court  of  Exchequer,  in 

of  a  very  elaborate  judgment,  but  without  the  point  having 

noticed  iii  the  argument^  or  being  n<  oessary  to  the  decision,  or  in- 

deed  having  much,  if  any,  connection  with  the  question  decided,  that 

the  holder  of  a  oheque  maj  sue  a  drawer  on  aon-payment  by  the  banker, 

if  he  be  holder  for  ralui  |     i    But  how<  ■•  c  this  ma)  be,  it  is  remarkable 

that  there  \i  no  ease  in  which  the  bearer  ha-  recovered  against  the 

draw*  ■   iii  circumstances  whiofa  brought  the  cheque  within  the 

of  bill-  of  exchange,  and  where  it  was  Bued  on  as  such,  and 

the  eustom  or  law  merchant  was  relied  on. 

.1..  Oamidge  v.  Alienor,  6  B.  k  0.  373.  cited  per  Patteson,  J., 
Oliver,  10  Q.  15.  713. 
(/)  Bee  Bellamj  r.  Majoribanks,  21  L.  J..  Exch,  :: 


CHEQUES.  59 

But  the  general  opinion  seems  to  be,  that  the  bearer  may  always  sue 
the  drawer  of  a  cheque  upon  dishonour  by  the  banker  on  a  proper  pre- 
sentment ;  and  the  ground  seems  to  be,  that  the  drawer  promises  every 
bearer  that  the  amount  shall  be  paid  on  due  presentment;  it  may  also 
be  said,  that  the  bearer  takes  the  cheque  in  payment  on  the  p  ^  -, 
faith  *of  the  drawer's  name,  which  faith  the  drawer  expressly  L  '  *"  J 
invites,  by  making  the  instrument  payable  to  bearer,  and  the  books  of 
precedents  contain  forms  accordingly ;  but  it  is  observable,  that  the  point 
has  never  been  solemnly  decided.  (/) 

(/•)  See  2  Chit.  Pleading,  100,  (7th  edit. ;)  1  Wentw.  373  ;  Serle  v.  Norton,  9  M. 
&  W.  309;  Watson  v.  Poulson,  15  Jur.  1111;  Serrell  v.  Derbyshire,  &c.,  Railway 
Company,  19  L.  J.,  C.  B.  371. 

In  Boehm  v.  Sterling,  7  T.  R.  426,  an  instrument  was  drawn  on  bankers  and 
made  payable  to  Dobson  or  bearer,  but  was  not  delivered  to  Dobson,  but  to  per- 
sons under  whom  plaintiff  claimed ;  and  there  the  plaintiff,  being  the  holder  sued 
the  drawer,  and  the  instrument  was  treated  as  a  bill  of  exchange,  and  therefore 
not  the  general  law  which  forbids,  but  the  law  merchant,  which,  in  regard  to  bills 
of  exchange,  sanctions,  the  assignment  of  a  chose  in  action,  was  relied  on. 

In  Samuel  v.  Green,  10  Q.  B.  262,  debt  was  brought  by  holder  against  drawer 
on  a  cheque  drawn,  payable  to  Tucker  or  bearer,  and  the  cheque  was  alleged  to 
have  been  delivered  by  drawer  to  plaintiff ;  in  fact,  the  cheque  was  handed  to 
Tucker,  but  without  consideration,  and  merely  that  he  might  get  money  upon  it 
for  the  defendant,  and  he  delivered  it  to  plaintiff;  Tucker  therefore  was  to  be 
looked  upon  either  as  agent  for  plaintiff  or  for  defendant,  and  in  either  case  de- 
livery to  him  was  delivery  to  plaintiff,  from  whom  a  consideration  moved  to  the 
defendant.  N.  B. — Now,  in  case  of  a  bill  of  exchange  payable  to  bearer,  there  must 
be  a  stamp  to  make  it  valid. 

In  an  action  by  payee  v.  drawer,  it  is  a  good  answer  to  show  that  there  was  no 
consideration  for  drawing  the  cheque  ;  Mills  v.  Oddy,  3  Dowl.  722  ;  and  would  it 
not  be  equally  so  to  show  that  there  was  no  considerationbetween  bearer  and  drawer, 
otherwise  the  payee's  servant  sent  with  the  cheque  and  refused  payment  might 
recover  to  his  own  use.  If  it  be  urged  that  the  defendant  promises  on  the  cheque 
that  his  banker  shall  pay  any  one  who  presents  it,  it  may  be  replied  that  he  can- 
not make  such  promise,  for  it  is  nudum  pactum,  by  which  he  is  not  bound  as  re- 
gards a  mere  bearer.  Moore  v.  Barthrup,  2  Dowl.  &  R.  25,  lays  down  that  a 
cheque  is  a  mere  chose  in  action,  not  assignable,  and  not  recoverable  by  action  [of 
trover].  Except  as  above  mentioned  in  this  note  there  appears  to  be  no  case  re- 
ported in  which  a  mere  bearer  has  recovered  against  the  drawer. 

It  is  to  be  observed  that  the  notion  at  one  time  entertained  of  nudum  pactum  not 
applying  to  written  or  mercantile  contracts  has  long  been  entirely  exploded.  Rann 
v.  Hughes,  7  T.  R.  350,  n. ;  In  Dom.  Proc.  per  Ld.  Kenyon,  C.  J.,  1  East,  104 ; 
Bank  of  Ireland  v.  Archer,  11  M.  &  W.  389. 

If  it  be  said  "the  practice  is  so,"  it  may  be  answered,  that  can  make  no  differ- 
ence ;  the  real  question  is,  "what  is  the  law  ?"  Per  Ld.  Ellenborough,  C.  J.,  Glyn 
v.  Baker,  13  East,  513,  514. 

Scott  v.  Franklin,  15  East,  428,  is  a  peculiar  case:  there  a  customer  whose  ac- 
count was  overdrawn  pays  into  his  banker's  on  his  running  account,  a  cheque  for 
500Z.  drawn  in  his  favour  by  a  third  person.  The  bankers  have  a  lien  on  such 
cheque  for  the  balance  due  to  them.  Therefore  it  was  held,  that  on  their  bank- 
ruptcy their  assignees  might  sue  the  drawer,  who,  the  report  says,  defended  on 
behalf  of  the  customer,  and  recover  not  the  amount  of  the  cheque,  which  was  500Z., 
but  the  amount  of  their  lien,  which  was  141.  9s.  9d.  Ld.  Ellenborough  treats  the 
cheque  as  a  bill  of  exchange,  payable  to  bearer,  which  was  immediately  due,  and 
says,  if  it  passed  to  the  bankers  by  the  delivery  at  all,  it  passed  a  legal  and  not  a 
mere  equitable  lien.  This,  it  is  submitted,  cannot  be  considered  as  an  authority 
for  saying  that  bearer  may  recover  against  drawer  upon  a  cheque  as  such. 

Referring  to  the  former  part  of  this  note,  we  may  observe  the  lateness  of  the 
period  at  which  bills  of  exchange  payable  to  bearer  were  considered  to  be  within 
the  custom  of  merchants.  So  late  as  the  year  1764,  we  find  the  recorder  of  Lon- 
don denying  there  was  any  instance  of  any  custom  of  merchants  of  a  bill  of  ex- 


.  I  1.  A  N  I    1 1  N     I  II  I    I  A  W     0  F    B  A  X  KING. 

•  Bat  if  the  oheqae  be  cashed  in  forged  Bank  of  England  n< 

L        J  the  payment  i.-  a  nullity;  for  it  is  only  in  valid  hank  notes  that 

lerean  legally  be  made 'J  h)  and  the  law  appears  to  be  that,  in  strict- 

the  drawer  might  recover  damages  from  the  banker  for  dishonour- 

ing  his  oheqae,  although  the  banker  were  ignorant  when  he  tendered 

the  bank  notes  that  they  were  Bporious  ;  for  the  payee  of  the  oheque  may 

certainly  treat  the  debt  due  to  him  from  the  drawer  as  nnpaid,  and  may 

t  it  from  himj  and  consequently  *the  drawer  may  recover 

L    "     J  frmi  the  banker;   according  to  the  rule  above  slated,  that  when 

■  loss   most  fall    upon    one  of  two  innoeeiit    parties,  the  sufferer   must  be 

the  party  whose  conduct  has  most  immediately  led  to  it  ;  and  here  the 
banker  is  guilty  of  laches  and  negligence  in  not  ascertaining  the  genoine- 
:'  the  bank  notes  before  he  tenders  and  passes  them. 
A-  there  i.-  no  privity  between  the  bearer  and  the  banker,  and  the 
former  is  merely  the  hand  into  which  the  banker  is  directed  by  the 
drawer  to  pay  the  debt  which  the  banker  owe-  to  him  (the  drawer,)  and 
the  order  of  the  drawer  cannot  Operate  to  make  the  banker  debtor  to  the 

r,  of  coarse  the  bearer  eannot  sue  the  banker  for  non-payment,  un- 
li  --  in  the  nnusna]  case  of  the  banker's  accepting  the  instrument. (i\ 

1.   hi  what  has  been  said  it  will  be  seen  how  great  is  the  difference 

in  the  situation  of  the  payee  of  the  cheque,  when  the  payment  is  made 

by  tie'   banker  in   notes  of  the   Bank  of  England,  and  in  notes  of  any 

country  bank:  for  a  payment  in  spurious  paper,  purporting  to  be  that  of 

Bank  Of   England,  is    a  nullity,  whether    objected    to    or   not   at    the 

;  and  the  banker,  upon  the  forgery  being  discovered,  must  pay  over 
again  tin;  sum  which  they  purported  to   represent,  provided  the  payee  of 

heqoe  has  not  paid  them  away,  and  got  value  lor  them,  in  the  mean- 
time ;  and  the  reason  is,  beeause  the  payee  is,  prima  facie  bound,  to  take 
sueh  notes  iii  payment  every  where,  but  from  the  Bank  of  England  or 
it.-  branches,  and  the  legislature  having  made  them  a  part  of  the  currency, 

change  being  made  payable  to  bearer,  Grant  v.  Vanghan,  3  Burr.  1517.  in  which 

i  L(  1  that  Bach  a  bill  was  negotiable  within  the  custom  of  mer- 
chants. Hennii..  child,  12  J.  B.  Moore.  .".::.,  :■:<;.•  Bee  3  N.  R.  183,  481, 
per  II'  .ah.  .J.:  Gibson  v.  Mind,  i  E.  Bla.  621, per  Eyre,  C.  B. ;  S.  C,  id.  606 ;  Jor- 
dan v.  Harlow.  ::  Sal. 

on  Dill.-,  \\  200,  ."-:,  62.    Bnch  hills  arc  only  transferable  by  delivery 

merely  in  virtue  of  tie  iiant.  hut  no  authority  ha-  ever  .-aid  that  the  law 

leqnes.     Bowever,  the  following  passage  in  a  jndgmenl  of 

leqner  Chamber  appears  to  state  the  law  in  accordance  with  the 

tated  in  Uii.-  note: — ••The  instruments  by  which  the  alleged  pay- 

irden  whereby  the  d<  i  Dank 

'■""1*  cash  Lirected  to  pay  the  money  to  the  plaintiff.     It  is  clear 

■  instrument  will  not.  by  the  general  lav.,  give  anj  righl  of  action  to 

other  than  the  plaintiff)  who  might  become  po  it:  and  it 

nfa  nded  in  the  argument  at  the  bar  that  Bnch  right  of  action  existed  by 

eneral  law;  bntil  ted  that  thi  torn  of  merchants  and 

gave  such  a  right  of  action,  fcc,  hut  we  arc  of  opinion 

tli:it  '•■  on."     Partridge  v.  Hank  of 

■  '.'.  B.  424,  u:.,  referring  to  Glyn  v.  Baker,  13  East,  509,  614,  where  a 

•tine  had  been  held  with  respe<  I  to  India  bonds.     See  Miller  v.  Race, 

there;  l  i  M.  .v.  W.  405,  407,  per  Parke  B 
per  Littiedale,  J..  Camidge  v.  Ailenby,  i  (85. 

{')  i'  Majoribankt,  -'l  L.  J..  Exch   11 


CHEQUES.  61 

the  genuineness  of  sucli  notes  is  prima  facie  to  be  presumed,  and  if  not, 
the  payee  has  no  ready  test  by  which  it  can  be  ascertained,  or  even  an 
approximation  to  proof  be  made,  whether  they  are  good  notes  or  forged : 
he  is  therefore  prima  facie  obliged  to  take  them,  when  tendered  in  pay- 
ment. 

Country  Bank  Notes. — With  respect  to  country  bank  *notes  .-  „.or  -, 
the  case  is  different,  they  form  no  part  of  the  currency ;  the  L  '  J 
payee's  choice  of  taking  or  refusing  is  absolutely  free ;  he  is  aware  not 
only  that  they  may  be  forged,  but  (what  is  quite  possible  in  this  case,) 
that  the  country  bank  may  have  stopped  payment  before  they  can  be 
presented.  If  therefore  the  payee  elects  to  take  them  as  cash,  he  must 
be  held  to  have  chosen  to  bear  either  of  the  risks  that  attach  to  them, 
and  the  banker,  if  he  have  made  no  improper  representations  to  induce 
the  payee  to  receive  them,  and  did  not  know  at  the  time  that  he  tendered 
them  in  payment  that  for  any  reason  they  were  worthless,  or  likely  to  be 
so  by  the  time  they  could  be  presented  at  the  country  bank  for  payment, 
will  be  absolved  from  further  liability. 

Counterfeit  Coin. — Similarly  in  case  the  banker  innocently  makes  the 
payment  in  bad  coined  money,  the  payee  taking  it  in  payment  without 
objection  on  the  moment,  that  is  before  the  transaction  of  the  present- 
ment and  payment,  can  be  considered  as  fairly  at  an  end,  cannot  after- 
wards complain,  and  must  bear  the  loss,  for  he  takes  it  at  his  peril ;  and 
having  once  recognized  it  as  money,  cannot  afterwards  be  allowed  to  say 
it  is  not  so.(A-)  This,  which  is  the  general  rule  applicable  wherever  a 
debt  is  paid  in  coin,  seems  to  rest  on  satisfactory  grounds ;  for  there  are 
various  and  well  known  tests  which  may  readily  be  applied  for  the  pur- 
pose of  ascertaining  the  goodness  of  money,  as  weighing,  ringing,  &c. ; 
and,  moreover,  it  would  obviously  open  a  door  to  fraud,  and  endless  con- 
fusion and  delay  of  business,  if  the  payee  of  a  debt  were  allowed  to  say 
that  "  such  and  such  coins  were  received  in  payment  from  the  debtor 
and  were  bad ;  their  account  must  be  paid  over  again."  In  most  instan- 
ces, this  would  be  to  place  the  debtor,  who  would  be  without  any  means 
of  showing  that  the  coins  he  paid  with  were  other  than  those  which  the 
creditor  alleges  to  be  forged,  at  the  mercy  of  the  latter.  The  principle, 
therefore,  that  a  loss  *which  must  fall  upon  one  of  two  innocent  .-  ^„  -. 
parties,  shall  fall  upon  that  one  whose  conduct  has  given  rise  to  L  '  -» 
it,  seems  to  apply  here;  and  to  show  the  propriety  and  justice  of  ruling 
that  the  payee  who  might,  but  did  not,  apply  some  test,  or  take  the  ob- 
jection at  the  proper  time,  is  for  ever  concluded.  If  the  banker,  upon 
the  objection  being  made,  should  insist  that  the  money  is  good,  and  re- 
fuse to  change  it  for  other  coins,  the  payee  ought  to  request  him  to  put 
some  private  mark  upon  the  money,  and  perhaps  to  place  it  in  the  hands 
of  some  third  person,  until  it  could  be  assayed,  or  other  decisive  means 
taken  to  ascertain  its  real  value. 

Payment  by  Bill  of  Exchange. — So  the  payment  of  a  cheque  may  be 
made,  if  the  holder  pleases,  by  a  bill  of  exchange  drawn  by  the  banker.  (I) 

(k)  Vane  v.  Studley,  cited  by  Sir  E.  Coke  in  "Wade's  case,  5  Rep.  115. 
(I)  Com.  Dig.  tit.  Merchant,  F.  17.     So  also,  in  like  circumstances,  the  banker 
may  pay  a  cheque  by  his  promissory  note.     Sayer  v.  Wagstaff,  5  Beav.  415. 


I .  B  A  N  T    ON"    THE    LA  W    0  F    B  A  N  K  I  N  G. 

But  under  this  bead  man;  points,  some  involving  questions  of  much 

.  an-  to  be  noticed. 

1    [f  the  drawer  of  tin-  oheque,  Bending  his  Bervant  to  get  it  eashed, 

orden  •  bim  persuasion  to  take,  instead  of  cash,  the  banker's  bill 

bange,  that  is,  i  bill  of  ezobange  drawn  or  indorsed  by  the  banker, 

the  drawei  of  the  oheque  will  only  be  entitled  to  come  upon  the  banker 

for  tli«'  amount  in  ease  of  the  bill  not  being  paid  at  maturity,  if  he  has 

taken  all  due  measures  to  obtain  payment  of  the  bill,  by  endeavouring  to 

get   it   son  pted,  &o.  ;  for  it  follows,  from  the  legal  relation  between  a 

banker  and  a  depositor  of  money  with  him,  that  the  former  is  the  debtor 

Of  the  latter,  and  by  the    BXpiOBfl  Words  of  the  statute  -'J  &  4  Anne,  C.  9, 

-;  j  ••  it  any  person  doth  accept  any  inland  bill  of  exchange  fur  and 
_  in  satisfaction  of  any  former  debt  or  sum  of  money  formerly  *due 
-I  unto  him,  the  same  Bhall  be  accounted  and  esteemed  a  full  and 
complete  payment  of  such  debt,  if  Buch  person  accepting  of  any  such 
bill  for  his  debt  doth  not  take  his  due  course  to  obtain  payment  thereof 
by  endeavouring  to  get  the  same  accepted  and  paid,  \<\"  If,  therefore, 
the  drawer  of  the  cheque  takes  all  due  steps  for  the  above  purposes,  then 
the  loss,  it'  the  bill  is  dishonoured  at  maturity,  must  fall  not  upon  him 
but  upon  the  banker;  if  he  neglects  to  take  proper  measures  he  must 

bear  the  loss. 

_'.   In  the  case  of  the  payee,  however,  the  statute  does  not  apply, 

use  there  is  no  debt  antecedent  or  otherwise  between  the  banker 

and   him.  he  is  only  the  hand  appointed  by  the  banker's  creditor,  who 

draw-  thecheque,  to  receive  payment  of  the  banker's  debt  to  the  drawer. 

If,  therefore,  the  payee  chooses,  on  presenting  the  cheque,  to  take  the 

banker's  bill  of  exchange  instead  of  cash,  and  the  bill  is  not  paid,  the 

must  bear  the  loss;   he  cannot  have   recourse  to  the  drawer  of  the 

cheque,  for  the  drawer  having  given  him  the  mean-  of  getting  his   debt 

discharged  in  cash,  cannot  be  in  a  worse  position  because  the  payee  has 

i  lected  to  take  something  else;(»)  and  he  cannot  come  upon  the  banker, 

rcised  his  option  when  he  might  have  insisted  on  payment 

in    money,  and   there   is   no  debt  due  from   the   banker  to  him,   as  the 

cheque  does  not  operate  at  common  law  to  transfer  a  cho$t  inaction; 

the  consequence  is  that  in  the  absence  of  fraud  in  the  banker,  the  payee 

of  the  cheque  bean  tin-  1..--;    and  this  must  be   the  case  independent  of 
any  laches  on  hi-  part,  and  whether  he  take-  the  due  OOUrSC    to    get   the 

bill  accepted,  &o.  or  not. 

The  nine  must  be  the  case,  although  the  oheque  had  circulated 

through   any  number  of  hand-   before  getting  into  the  possession  of  the 

bearer,  who  ultimately  presents  it   for  payment;  if  he  chooses,  under 
the  circumstances  above  mentioned,  to  take  in  payment  the  banker's 


me  thing  bad  been  mice]  before  the  Btatute  in  Darracb  v.  Sa- 
l  Show.  IBB.     If  tin-  lenrant  had  no  authority  to  take  a  lull  of  exchange  in 
raid  be  different,  and  the  banker  would  be  liable.    AVard  v. 
Li.  Barm.  Bi 

■  'fuel.  7  :  I  lit.  Mi  p  bant,  F.  17  ;  Strong  v. 

Lbbott,  Shipping,  419,  (8th  edit) 


CHEQUES.  63 

bill,  the  drawer  *and  all  the  successive  holders  between  the  .-  ^gg  -i 
drawer  and  the  person  presenting  for  payment  are  wholly  dis-  L  '  J 
charged,  for  none  of  them  are  consenting  parties  to  the  bearer's  election 
to  take  less  than  cash,  and  cannot  therefore  be  liable  for  the  conse- 
quences :  therefore,  in  the  absence  of  fraud  in  the  banker,  the  bearer 
suffers  the  loss. 

In  none  of  these  three  cases  can  the  drawer  sue  the  banker  for  dis- 
honouring his  cheque,  or  otherwise.  The  general  principle  that  an 
objection  to  a  tender  must  be  made  at  the  time  of  the  tender,  seems  to 
apply  hcre,(o)  and  the  banker  is  exonerated  by  showing  that  he  paid  the 
cheque  in  a  manner  with  which  the  bearer  was  satisfied. 

So  if  the  bearer  requests  it,  or  does  not  object  at  the  time,  the  payment 
may  be  effectually  made,  in  the  absence  of  fraud  or  concealment  of  facts, 
in  bank  post  bills. (p) 

So,  in  like  circumstances,  payment  may  be  made  by  another  cheque 
drawn  by  the  banker,  and  the  loss,  if  any,  must  fall  on  the  taker.^) 

4.  The  Cheque  is  usually  made  payahle  to  a  person  named  or 
hearer t — That  the  cheque  be  made  payable  to  bearer  is  the  essential 
part  of  this  head;(r)  to  be  exempt  from  the  stamp  it  must,  as  will  be 
seen  by  reference  to  the  extract  from  the  Schedule,  part  1,  of  55  Geo. 
III.  c.  184,  given  above,(s)  be  made  payable  to  bearer :  the  statute  says 
nothing  about  the  name  of  the  intended  payee  being  inserted;  but  by 
the  nearly  universal  practice  as  regards  bankers'  cheques,  a  name  is 
inserted,  as  of  a  person,  in  whose  favour  the  cheque  is  drawn ;  and  the 
convenience  of  this  is  obvious,  for  by  inserting  the  name,  or  the  word 
"self,"  and  then  adding  "or  bearer,"  either  the  payee  in  person,  or 
any  one  to  whom  *he  may  deliver  the  cheque,  is  competent  to  r-  ^oq  -i 
receive  the  cash  for  it,  and  the  banker  is  bound  to  pay  it  in  either  L  *  J 
case. 

A  cheque  made  payable  to  a  person  named,  without  the  words  "  or 
bearer,"  or  words  to  the  same  effect,  is  not  a  cheque  within  the  meaning 
of  this  statute,  and  therefore  cannot  be  paid  by  a  banker,  except  under 
the  penalty  above  mentioned,  and  the  additional  punishment  of  incapa- 
city to  charge  the  drawer  on  account  with  the  sum  paid  upon  it,(£) 
unless  it  be  stamped. 

Also,  such  cheque,  without  the  words  "  or  bearer,"  would  be  defec- 
tive as  regards  the  above  statute,  unless  it  contained  the  words  "  on 
demand ;"  because  though  a  cheque  made  payable  to  bearer  is,  in  legal 
construction,  payable  on  demand,  a  cheque  made  payable  to  a  person 
named,  without  more,  is  not  payable  on  demand. (u\ 

That  it  is  not  indispensable  to  name  an  individual  person  is  shown  by 


(o)  Richardson  v.  Jackson,  8  M.  &  W.  298 ;  Bull  v.  Parker,  2  Dowl.  N.  S.  345. 
(p)  Tiley  v.  Courtier,  cited  per  Bayley,  J.,  2  Cro.  &  J.  16. 
(q)  Jones  v.  Arthur,  8  Dowl.  442  ;  Wilby  v.  Warren,  cited  2  Cro.  &  J.  18,  n. 
(r)  In  Tate  v.  Hilberd,  2  Ves.  Jun.  118,  the  form  was  "Pay  to  self  or  bearer 
2001."     So  Other  v.  Iveson,  24  L.  J.,  Ch.  654. 
(s)  Supra,  13,  14. 

(t)  Supra,  17,  stat.  55  Geo.  III.  c.  184,  s.  13;  R.  v.  Yates,  Moo.  0.  C.  170. 
(w)  See  Doe  d.  Church  v.  Pontifex,  9  C.  B.  229. 

January,  1857. — 6 


(I  RANT    ON    Till:    LAW    OF    BANKING. 

this,  that  ■  oheque  town  thus,   ■•  Pay  ship  Fortune,  or  bearer,"  is  a 
valid  instrument,  and  may  be  sued  upon  by  bearer.(t>) 

Ckequt  mvttbeartki  Drawer'*  Signature. — Signature  does 
--irily  mean  subscription,  or  writing  the  full  name  at  the  foot 
of  the  document;  it'  the  name  appear  in  any  part  <>t'  the  cheque,  so  as 
t  .  show  who  it  is  that  orden  the  payment,  that  will  be  sufficient  to 
authorise  the  bankers  to  pay,  provided  the  handwriting  be  that  of  their 
mer  of  the  nam.  stated.  For  the  reason  of  requiring  signature  will 
be  thus  satisfied  ;  for  adequate  means  of  identification  by  the  haud- 
writing  will  be  afforded.) 

Thus  a  cheque  would  l>e  good  which,  instead  of  b<  ing  subscribed  with 

,  ..  the  name  of  the  drawn-,   as  in  the  form   *above  given,  was 

I         -I  expressed  tlm^: —  [,  John  Stiles,  desire  you  to  pay,"  &o. ;  and 

properly  addressed,  &o;    or  thus:   "Mr.   Stiles  desires   M< 
Holdfast  to  pay,"  &o. ;  tor  in  either  case,  being  written  by  fche  party 
drawing,  the  oheque  would  contain  sufficient  means  of  identification. 

An  illiterate  person  must  draw  a  cheque,  by  placing  his  mark,  in  the 
usual  place  of  writing  a  name  and  style,  on  a  cheque,  the  body  of  the 
I  eing  filled  up  in  the  usual  manner,  (y) 
An  infant  cannot  draw  or  sign  a  valid  cheque;  in  other  words,  a 
banker  cashing  the  cheque  of  an  infant,  is  not  thereby  discharged  ; 
for  a  person  under  age  cannot  draw  a  cheque,  for  he  cannot  give  a  legal 
discharge . 

/  tecutort. — Executors,  however  numerous,  are  regarded  in  law  as  an 

individual  person;  and  therefore  the  acts  of  one  of  them,  in  respect  of 

Lmmistration  of  the  effects,  are  deemed  to  be  the  acts  of  all.     Hence 

nt  to  one  is  payment  to  all;  and  it  follows  that  if  a  number  of 

itors  have  a  fund  standing  in  their  joint  nam.-  at  a  banker's,  pay- 

nn-nt  of  a  cheque  signed  by  one  of  the  executors  will  discharge  the 

bankers  as  to  all  of  them.(a)     So  it  would  be,  although  the  executors 

oting  nnder  a  forged  will.(6) 

9    a  payment  to  the  oheque  of  any  of  several  administrators,  made 

bona  fide,  would  discharge  the  banker,  although  a  will  should  afterwards 

be  found 

-    a  payment  to  die  cheque  of  a  surviving  administrator  of  several, 
-  the  bankers  :  in  a  case  where  such  survivor  drew  out  a  fund 
absconded,  the  Ion  was  made  to  fall  on  the  estate  of  the  deceased 
administrator.fd) 

1528;  and  see  Id.  1630,  marg. ;  per  Eyre, 

:.  in  I'.iin.  Proc.  1  II.  I'.l;i.  ' 

Jackson,  2  Bos.  &  P.  238  ; 

574,  where  1 1 1 «-  christian  name  of  the  writer  was  not 

r.  Smith.  11  8im.  150;   Parker  v.  Smith,  I  Coll.  Ch.  C.  608. 

hire,  -V'  ..  Railwaj  Company,  19  L.  J.,  C.  B. 

■..1  v.  Lloyd,  6  If.  k  W.  31. 
Bigby.  19  Ve*.  462  ;  Shi  p.  Tom  I.  I  ;;  Atk.  695  ; 

.at  v.  Taylor.  '.'  liar. 

■    .    Dtrodas,  B  T.  i:.  . 

Underwood,  :'  Ld.  Raym.  1210. 
i.  v   Bond,  J  M.\.       •  m,  504.     , 


CHEQUES.  65 

*With  respect  to  the  assignees  of  a  bankrupt,  payment  to  one  of  .-  ^  -. 
several  has  been  held  not  to  be  good  ;(e)  there  are,  however,  other  L  J 
cases(/)  in  which  such  payment  has  been  held  valid  to  discharge  the 
debtor  when  made  bond  fide,  and  unless  the  other  assignees  have  ex- 
pressed their  dissent. 

It  would  seem,  therefore,  doubtful  whether  a  banker  would  be  dis- 
charged by  honouring  a  cheque  signed  by  one  of  several  assignees,  in 
ordinary  circumstances. 

An  ao-ent  has  no  authority,  as  such,  to  overdraw  a  banking  account ; 
but  if  he  has  done  so,  with  the  knowledge  of  his  principal,  that  is  evi- 
dence from  which  the  jury  many  infer  authority. (gr) 

Trustees. — In  case  of  trustees  in  general,  or  any  other  body  of  persons 
not  being  in  partnership,  having  deposited  money  to  their  joint  account 
with  bankers,  the  latter  are,  by  the  nature  of  the  relation  between  banker 
and  customer,  as  regulated  by  the  usage  of  banking,  entitled  to  have 
assurance  that  each  of  the  trustees,  or  each  of  the  body  of  persons, 
assents  to  and  authorizes  the  money  being  paid  out,  and  therefore,  in 
such  case,  the  law  is  that  each  trustee,  or  each  of  the  body,  must  sign 
the  cheque,(A)  or  the  bankers  may  refuse  to  pay  it ;  for  they  will  not  be 
discharged  if  they  do  pay  it,  except  where,  subsequent  to  the  deposit, 
the  drawer  has  become  alone  entitled  to  receive  the  money. (i) 

In  the  case  of  several  persons,  not  partners,  having  a  joint  deposit  ac- 
count with  them,  they  could  not  plead  in  bar  with  effect,  nor  could  they 
even  plead,  it  would  appear,  in  abatement,  that  since  the  commencement 
of  the  action  they  had  paid  the  sum  on  the  cheque  of  one  of  the  plain- 
tiffs j  for,  *though  it  is  a  general  position,  that  a  payment,  or  an  .-  ^  -. 
accord  and  satisfaction,  of  the  joint  debt  may  take  place  between  L  '^  -> 
one  of  several  plaintiffs  and  the  defendant,  which  the  latter  may  set  up 
against  the  further  maintenance  of  the  action,  that  only  holds  where 
there  is  nothing  illegal  in  the  transaction ;  but,  it  seems,  that  the  law 
merchant  prevents  a  payment  on  a  cheque  drawn  by  one  of  several,  not 
in  partnership,  from  binding  them  so  as  to  cancel  so  much  of  the  joint 
debt,  and  therefore  that  the  payment  having  been  made  by  the  bankers, 
in  violation  of  the  law  and  in  their  own  wrong,  cannot  be  so  taken  advan- 
tage of;  in  other  words,  the  bankers  would  be  liable  to  pay  the  money 
over  again. (k)  Nor,  in  the  absence  of  fraud,  could  they  recover  from 
the  drawer  of  the  cheque  the  sum  they  had  paid  him ;  for  a  sum  paid 
with  a  full  knowledge  of  the  facts  (knowledge  of  the  law  being  imputed) 
cannot  be  recovered  back ;  it  is  in  such  case  a  gratuitous  donation. 

"Where  one  of  such  trustees  has  absconded,  so  that  his  signature  cannot 
be  obtained,  equity  will  relieve  by  making  an  order  that  the  bankers  shall 


(e)  Can  v.  Read,  3  Atk.  695. 

(/)  Smith  v.  Jameson,  1  Esp.  114 ;  Bristow  v.  Eastman,  id.  174. 

(ff)  Pott  v.  Bevan,  1  Car.  &  K.  335. 

(h)  Innes  v.  Stephenson,  1  M.  &  Rob.  145 ;  Husband  v.  Davis,  10  C.  B.  640 ; 
Stone  v.  Marsh,  Ry.  &  M.  364 ;  see  Carvick  v.  Vickery,  2  Dougl.  653,  n. 

(i)  Lee  v.  Stewart,  M.  &  Malk.  160. 

\k)  Compare  Wallace  v.  Kelsall,  7  M.  &  W.  242,  with  Husband  v.  Davis,  10  C. 
B.  640. 


GRANT    ON    TIIE    LAW    OF    BAHKINO. 

pay  the  cheque  of  the  remaining  trustees ;(/)  at  least,  this  will  be  done 
in  bankruptcy  in  oase  of  assignees  of  bankrupts  absconding  or  dying; 
and  bo  in  the  case  of  other  trnsteea  of  funds  over  which  the  court  has 
control  j(m)  and  in  such  can  the  court  would  probably  order,  in  proper 

circumstances,  the  payment  t ic  alone,  however  aumerous  the  trusl 

might  be.(» ) 

The  above  position,  with  respect  to  the  relief  in  equity  when  the  sig- 
natures of  all  the  persons  (not  partners.)  to  whose  joint  account  money 
is  in  the  hands  of  bankers,  has  ♦been  stated,  in  a  work  of  au- 
L  J  thority,  in  more  genera]  term-,  as  it'  equity  would  assist,  in  all 
where  it  was  become  impossible  to  obtain  the  full  complement  of 
signatures  ;(o)  but  there  appears  to  be  do  decided  case,  furnishing  any 
ground  to  suppose  that  Buch  interposition  may  be  had,  in  any  instances 
hut  those,  where  the  fund  i.s  already,  from  Borne  special  oiroumstanoes, 
under  the  control  of  the  court;  and  the  language  of  the  legislature,  in 
the  late  "act  for  the  further  Belief  of  Trustees/'  seems  to  Bhowthat 
then-  was  do  such  general  practice,  even  in  favour  of  trustees,  previous 
tq  1849;  for  it  empowers  any  equity  judge,  where  moneys  shall  be 
deposited  with  any  banker  on  the  account  of  any  persons  as  tin 
executors  or  administrators,  or  otherwise,  to  make  rach  order  for  the  pay- 
ment of  Buch  moneys  to  the  major  part  of  such  trustees,  &c.  where  for  any 
a  the  concurrence  of  the  others  cannot  be  had,  &c.  as  to  the  said 
judge  shall  seem  meet,  &o.(p\ 

Although  the  following  ease  is  but  slightly  connected  with  this  part 
of  the  subject,  it  may  not  unfitly  be  added  at  the  close  of  the  subject  of 
signature  of  cheques  by  trust 

A  receiver  in  chancery,  in  order  to  induce  two  persons  to  become  his 
sureties,  arranges  with  them  that  the  rents  of  the  estate  shall  be  paid  to 
a  third  person,  and  by  him  paid  into  a  bank,  to  the  joint  account  of  the 
two  sureties,  and  that  all  cheques  shall  be  in  the  handwriting  of  the 
third  person,  and  shall  be  Bigned  by  himself,  the  receiver.  On  the 
failure  of  the  hank,  it  was  held  by  Lord  Brougham,  C,  and  his  decree 
was  oonfirmed  by  the  House  of  bonis,  that  the  receiver  and  his  sureties 
were  liable  for  the  amount  of  the  *fund,  for  that  a  trustee  has  do 
L        J  authority  to  place  a  trust  fund  beyond  his  own  control. (f) 

Accountant- General. — How  cheques  are  to  be  drawn.  &c,  by  the 
aeral  in  bankruptcy  may  be  seen  in  L2  &  L3  Vict.  c.  106, 

(/)  Ex  parte  Hunter,  2  Rose,  363;  8.  0.,  1  lieriv.  408  :  see  Slomau  v.  Hank  of 
Rngland,  14  Bim.  475. 

Ch.  C.  !•-•: 
Bhortbridge'i  case,  L2  iving  funds  in  private 

Vict.  c.  74 ;  Si- In.  Smith's  Chanc.  Pract  1 L855),  1 10. 

f  the  numerous  works  on  chancery 
I >  1- . .  i'li  role. 

(/<)  12  A  13  Vii-i.  e.  7 1.  s.  1.     Comparing  this  acl  with  the  former  Trustees  Be- 
lief Act,  i'i  .v.  ll  Vict.  e.  96,  which  it  oras  passed  t.>  amend,  it  Beems  difficult  to 
1  for  it.  If  the  court*  of  equity  had  already  the  general  power  of 
ordering  any  funds  standing  in  a  bank,  to  thejoinl  account  of  several,  to  be  paid, 
in  proper  circus  1  the  cheque  ofa  Bingle  one. 

d/i  Sahray  w.  Salway,  J  Buss,  .v  M.  216;   La  I>..m.  Proc.  uom.  Baugh  v.  White, 

lit) 


CHEQUES.  67 

s.  34,  and  the  rules  and  orders  made  in  pursuance  of  that  statute,  Rs. 
138,  139. 

How  cheques  are  to  be  signed,  in  cases  of  cheques  on  the  Bank  of 
England  or  its  branch  banks,  where  a  joint-stock  company  is  being- 
wound  up,  see  19  &  20  Vict.  c.  47,  s.  83. 

Partners. — In  the  case  of  partners  having  a  joint  account  with  a 
banker, — 

"  There  is  no  doubt  but  that  the  act  of  every  single  partner,  in  a 
transaction  relating  to  the  partnership,  binds  the  others. "(r) 

Therefore,  in  the  absence  of  any  special  agreement,  fixing  the  mode 
in  which  cheques  should  be  drawn  upon  the  partnership  fund,  in  his 
hands,  the  banker  would  be  bound  to  honour  cheques  drawn  in  any  of 
the  modes  following  : — 

1.  A  cheque  bearing  the  signature  of  any  one  of  the  partners'.  This 
is  allowed  by  the  law  merchant,  and  is  in  accordance  with  the  usage  of 
bankers. 

2.  A  cheque  bearing  the  signatures  of  all  or  any  number  of  the  part- 
ners: &  fortiori  of  a  proper  majority  acting  bond  jide.(s) 

3.  A  cheque,  bearing  the  name  or  style  of  the  firm,  in  the  handwriting 
of  any  one  of  the  partners. 

4.  A  cheque  signed  by  one  of  the  partners,  thus — "A.,  B.  and  Co., 
per  procuration  of  A."M 

*5.  A  cheque  signed  by  a  partner,  stating  himself  to  sign  for  .-  ^ .  r  -, 
self  and  the  rest  of  the  partners.  (?t)  L         -* 

If  the  name  of  the  firm  be  inaccurately  stated,  it  would  seem  that 
the  banker  ought  not  to  cash  the  cheque  without  inquiry ;  for  such  a 
defect  would  probably  be  considered  by  a  jury  as  sufficient  to  awaken 
the  suspicion  of  a  prudent  man,  unless  it  were  shown  that  such  departure 
from  the  proper  style  was  habitual,  on  the  part  of  the  member  of  the 
firm,  in  whose  handwriting  the  cheque  had  the  appearance  of  being 
drawn,  or  unless  it  were  agreed  upon,  between  the  banker  and  the  part- 
nership, that  he  should  honour  cheques  so  drawn.  On  the  other  hand, 
without  such  inaccuracy  having  been  usual,  and  in  the  absence  of  any 
agreement,  it  would  seem  that  a  banker  would  be  justified  in  refusing 
payment,  because  it  is  probable  the  courts  would  hold  such  cheque  not 
to  bind  the  partnership,  if  it  were  drawn  by  one  partner  without  the 
authority  of  the  rest,  express  or  clearly  implied. (x) 

(r)  Per  Lord  Mansfield,  C.  J.,  Hope  v.  Cust,  1  East,  53  (cited) ;  Collyer  on  Partn. 
334. 

(s)  As  to  majority  binding  minority  in  partnership,  see  Const  v.  Harris,  Turn. 
&  It.  516 ;  Taylor  v.  Hughes,  2  Jo.  &  L.  24 ;  In  re  Vale  of  Neath  Brewery,  1  De  G. 
&  S.  m  ;  1  Mac.  &  G.  240. 

(t)  Williamson  v.  Johnson,  1  B.  &  C.  149.  It  is  not  uncommon  for  clerks  to  be 
empowered  to  draw  cheques  in  the  name  of  the  firm,  but  the  clerk  in  such  case  is 
not  liable  on  the  cheque.  See  Wilson  v.  Barthrup,  2  M.  &  W.  866.  Nor  could  he 
therefore  sue.     Driver  v.  Burton,  17  Q.  B.  989. 

(u)  Ex  parte  Buckley,  14  M.  &  W.  469.  As  to  deed  so  executed,  see  Smith  v. 
Winter,  4  M.  &  W.  454 ;  Burn  v.  Burn,  3  Ves.  573. 

(x)  See  Kirk  v.  Blurton,  9  M.  &  W.  284 ;  Sheppard  v.  Dry,  reported  Byles  on  Bills, 
32,  n.  (6th  edit.) ;  per  Tindal,  C.  J.,  Bawden  v.  Howell,  3  M.  &  Gra.  641  ;  Coll. 
Part.  268,  270 ;  Wintle  v.  Crowther,  1  C.  &  Jer.  310.     N.  B.— The  law  as  laid  down 


63  GRANT    "N    THE    LAW    OF    BANKING. 

A  question  may  arise,  whether  one  partner  could  not  bind  the  part- 
ying the  names  of  all  the  partners,  though  the  style  of 

the  firm  did  u<>t  consist  of  those  names. (//)  and  without  special  authority. 
r  -.  So  Btrong  is  the  ruh — payment  to  one  of  several  partners  *of 
L  J  a  debt  due  to  the  partnership  is  payment  to  all, (z\ — that  even 
after  a  dissolution  of  partnership,  of  which  the  bankers  have  notice, 
and  though  a  person  has  been  appointed  by  the  joint  assent  of  all  the 
partners,  and  with  the  knowledge  of  the  bankers,  to  receive  the  debts  of 
the  partnership,  unless  there  be  something  in  the  notice  which  expressly 
takes  away  the  power  of  any  one  partner  from  receiving  a  <Kd>t  due  to 
the  partnership,  the  bankers  may  honour  the  cheque  of  anyone,  and  will 
be  discharged.)  a ) 

[f  one  of  two  partners  opens  an  account  with  a  bank  in  his  own  name, 
this  is  not  conclusive  to  show  the  account  to  be  his  solely  ;  the  banker 
may  prove  that  the  partner  was  acting  as  agent  for  the  firm,  in  so  open- 
ing  the  account,  but  the  mere  fact  of  the  money  deposited  being  part- 
nership property  is  not  sufficient  to  show  that,  in  an  action  by  the  other 
partner  tor  dishonouring  his  cheque. (6) 

What  has  been  said  respecting  partners  Bigning  cheques  relates  only 
t  i  persons  who  are  known  to  the  bankers  to  be  members  of  the  firm,  and 
not  to  partners  who  are  not  so  known ;  for  a  banker  would  not  be  bound 
t  i  honour  the  cheque  of  a  dormant  partner,  whom  he  was  ignorant  to  be 
jointly  interested  in  the  fund  with  the  others,  although  he  were  satisfied 
of  the  genuineness  of  the  signature,  and  he  could  not,  therefore,  safely 
<1"  SO  until  he  had  tr< »t  the  authority  of  the  firm.(c) 

The  name  in  the  pass-book  is  not  conclusive  that  the  bankers  con- 
tracted with  that  person  dUme.ld) 

Where  two  houses  of  business  are  partners  in  a  particular  transaction 
ami  have  a  joint  Bum  to  the  account  of  the  transaction  in  the  hands  of  a 
bank,  payment  of  the  cheque  of  one  house,  out  of  that  fund,  is  payment 
to  botl 

j-^,-1  poratton. — When   a   corporate  body  has   a   deposit  at  a 

L  -I  banker's,  it  is  in  accordance  with  strict  principles  to  lay  down, 
that  the  bankers  would  not,  at  common  law,  be  discharged  by  payment 
of  a  cheque  that  was  not  under  the  common  seal,  or  signed  by  some 
officer  of  the  corporation,  whose  signature  the  bankers  were  authorized 
lour,  by  authority  expressly  given,  in  an  instrument  under  the 
common  Beal  ;  but  in  most  cases  of  statutory  corporations  power  is  given 
to  three  directors,  or  to  a  finance  committee,  or  to  other  officers  or  pcr- 

in  Kirk  v.  Blnrton  «;i-  disputed  by  Martin,  B.,  in  Porbes  \.  Marshall,  Eich.,  May 
i  Faith  v.  Richmond,  11  A.  &  !■;. 
Pi  :  Maule,  J.,  Norton  \.  Seymour,  3  C.  B.  792.  Bui  Bemble,  that  the  au- 
thority of  a  partner  is  to  use  the  name  of  the  firm  as  :i  signature,  or  to  sign  his 
own  ;  tint  that  the  common  law  forbids  the  signature  of  another  person's  name  to 
a  document  intended  to  have  a  legal  effi  I  the  signature  bi  "per 

fTOCUTa 

anon.  13  Mod.  ;  16  :  per  Tindal,  ('.  J.,  3  Moo.  &  P.  555  ;  Imfr  v.  East  India 

■   Man.  k  S.  156.  (6)  I  3eeley,  2  Bxch.  749. 

B ..  Cooke  v.  Beeli      I  Ezi      !  19. 
Sin        Bond,  5  B   A  ad,       I  (c)  Coll.  Part.  456. 


CHEQUES.  09 

sons  designated  in  the  act,  to  draw  and  sign  cheques,  &c.  In  such 
cases  the  cheques  ought  to  bear  the  signature  (and,  where  that  is 
required,  the  countersign)  of  all  the  parties  designated.  Thus,  without 
a  special  enactment,  the  signature  to  a  cheque,  of  the  chairman  of  the 
finance  committee  of  a  railway  or  other  incorporated  company  would  not 
be  valid ;  the  committee  not  being  a  partnership  nor  a  corporation,  all 
the  members  ought  to  sign  j  and  in  the  absence  of  an  agreement  binding 
on  the  corporation,  that  the  bankers  should  honour  cheques  signed  in 
some  other  specified  manner,  they  could  not  safely  do  so.  Nor  could  the 
payee  recover  against  the  corporation.  Thus,  where  a  statute  gave 
power  to  three  directors  to  sign,  &c.  and  the  cheque,  on  which  the  com- 
pany were  sued,  was  in  fact  signed  by  three  persons,  who,  it  was  proved, 
were  directors  of  the  railway,  but  they  did  not  state  themselves  to  be 
directors  on  the  face  of  the  cheque ;  there,  although  it  was  countersigned 
by  a  person  who  added  the  word  secretary  to  his  name,  and  who  seems 
to  have  been  secretary  to  the  company,  and  although  the  company  had 
funds  in  the  bank,  upon  which  the  cheque  purported  to  be  drawn,  and 
it  was  impressed  with  a  stamp  containing  the  name  of  the  corporation, 
plaintiff  failed.  It  is  true,  there  were  the  strong  circumstances  that  it 
was  intended  to  effect  the  payment  of  a  sum  of  the  company's  money,  to 
a  third  party,  in  fraud  of  the  company,  and  in  violation  of  the  special 
act ;  but  it  seems  probable  that  in  the  absence  of  these  latter  facts,  the 
judgment  would  have  *been  the  same,  viz.,  that  it  was  not  a  r^ft-, 
cheque  purporting  to  be  a  cheque  of  the  company,  and  was  not  L  -> 
binding  on  them.(/) 

It  seems  to  be  unsettled  whether  a  cheque  drawn  in  the  above  mode, 
or  in  a  mode  having  similar  peculiarities,  might  or  might  not  be  good  to 
bind  the  corporation,  if  it  were  shown,  which  was  not  done  in  the  above 
case,  that  they  had  been  in  the  habit  of  recognizing  cheques,  drawn  in 
exactly  the  same  form ;  but  the  better  opinion  seems  to  be  that,  however 
this  might  be  decided  if  the  question  came  before  the  court  clear  of  any 
circumstances  of  fraud  or  dishonest  intention,  at  any  rate  they  would 
not  be  bound  by  a  cheque  concocted  as  part  of  a  dishonest  transaction,^) 
though  it  might,  on  the  face  of  it,  conform  to  the  appearance  of  others, 
to  which  it  was  their  practice  to  give  credit. 

Having  thus  seen  in  what  circumstances  it  is  incumbent  upon  bankers 
to  cash  cheques,  next : — 

As  to  refusal. — If  a  banker,  having  presented  to  him  within  banking 
hours  a  cheque,  bearing  the  genuine  signature  of  a  customer  whose  funds 
in  the  bank  at  the  time  are  sufficient  to  pay  the  amount  drawn  for,  refuse 
to  pay,  he  is  liable  in  substantial  damages  to  the  drawer  -Jh)  but  it  will 
be  a  good  answer  to  an  action  to  recover  damages,  if  the  banker  can 
convince  a  jury  that,  although  he  had,  in  point  of  fact,  funds  of  the 
drawer's  in  his  hands,  at  the  time  of  presentment  of  the  cheque,  yet 

(/)  Serrell  v.  Derbyshire,  &c,  Railway  Company,  19  L.  J.,  C.  B.  371. 

(g)  See  S.  C,  per  Cresswell,  J.,  compared  with  observations  of  Maule  and  Tal- 
fourd,  Js. ;  see  Barber  v.  Gingell,  3  Esp.  60  :  see  also  Levy  v.  Pyne,  Car.  &  M.  453  ; 
Ball  v.  Morrell,  12  A.  &  E.  745. 

(h)  Eolin  v.  Steward,  14  C.  B.  595. 


70 


..I.  A  XT    OX    THE    LAW    OF    BANKING. 


.  i.htuu.l.-lia.l  not  been  paid  in,longenongn,ton»vebeeninhi8«« 
liable  time,  before  the  presentment     What  ia  a  reasonable  turn 
-,  ntment  most  be  ascertained  by  the  jury,  in  each  ease,  by* 
particular  ninrnmntan  as;  •  c.  .<//•"..  the  gi  aeral  magnitudeand 
•,-nt  of  *the  business  at  the  bank,  the  pressure  of  bnwnew  at 
J  the  tune,  or  oo  the  previous  part  of  the  day  in  question,  &c., 

V 

ike  judicial  notice  of  what  are  banking  houra  in  the  city 

adon.(/fc)     What  are  banking  houra  in  other  part-  of  the  metropolis, 

and  in  provincial  towns,  nans*  b    proved  in  each  ease  in  which  the  qnes- 

,ic>  material. 

Also  it  i-  a  defence  to  snob  action,  that  the  drawer's  aaseta  hare  been 

exhausted,  bj  the  payment  of  bills  accepted  by  him,  payable  at  the  bank- 

,,i.l  it  is  not  11 asary  for  the  bankers  to  show  any  special  authority 

or  any  further  order,  than  that  contained  in  such  acceptances,  to  enable 
I  :\-  the  amounts  due  upon  the  bUls,(l)  witliout  giving  a  right  of 
action  for  dishonouring  chequea  presented  subsequently. 

The  following  caa  /»  |  may  Berve  to  illustrate  the  principles  above  laid 
down.  <>n  a  certain  'lay  A.  had  Btanding  in  hid  name  at  his  bankers'  a 
balance  of  69J.  16a,  6a?.  About  "in-  o'clock  the  same  day  40/.  was  paid 
int  .  hie  account ;  a  little  after  three  o'clock,  a  cheque  drawn  by  him  was 
!' :.r  payment,  the  sum  being  %ll.  7«.  6d.  A  clerk,  after  re- 
ferring to  a  hook,  said  there  was  not  sufficient  assets,  but  that  the  oheque 
might  probably  go  through  the  clearing  house.  The  cheque  was  paid 
foil, win-  day.      At  the  trial  of  an  action,  brought  by  A.,  against 

tl,,    bankers,  no  actual  damage  waa  proved  against  the  bankers;  and 
th<    jury  found  Em  the  plaintiff,  with  nominal  damages;  but  the  court 

QOW  trial,  on  tin-  ground  that  the  plaintiff  was  entitled  to  real 
dt-taiitial  dam 
Within  what  Tim*  after  it  d,bytht  Payee,  a  Cheque  aught 

/„   prenented  for  Payment. — Somewhat  *different  consider*. 
'         J  tion-  arise  in  this  respect,  according  to  the  character  of  the  par> 
•  en  whom,  the  question  is  raised. 
1.    .1-  between  the  payee  <nul  tin  drawer,  the  rule  is,  that  the  drawer 
•  discharged,  that  is,  the  paj  •'  lose  his  remedy  against  the 

r.  by  rea*  d  of  aon-presentnient  within  any  prescribed  time,  short 
ot  -i\  yean  after  taking  the  eheque,  unless  the  insolvency  of  the  banker 
taken  place  in  the  interval;  that  b.  unless  tie    result  of  allowing 
tl,,.  payee  to  n  ■   aid  !><■  an  actual  loss  to  tin-  drawer,  who  has  done 

nothing  to  oause  the  selection  of  him,  as  tin-  one  of  the  two  parties,  bav- 
ins no  concern  in  bringing  about  tie   loss,  on  whom  it  is  to  fall.     Be- 
:  , rtic-,  therefore,  it  is  only  in  oase  of  the  intermediate  in- 
Boy  of  the  banker  that  tie'  cheque  can  become  stale, (/<)  all  other 

Wbil  •  England,  <;  Car.  ,v  !'  700;  8.  C,   l    0.  M.  k  R   744 

tti  \ .  William-,  1  B.  A:  A<1.   11 .V 

i ,  trdon,  T  Be  '  xat  ion  v.  Swinton,  2  Taunt.  224. 

■ 

i  B.  .v  Ad.  418  •  to  Bolin  v.  Steward,  14  C.  B.  59 
rch&eld,  1  '  .  0  B.,  (iritiiths  v. 


CHEQUES.  71 

circumstances  remaining  unaltered.  Still  the  payee  of  the  cheque  must 
bear  in  mind,  that  he  may  be  put  to  much  trouble  and  inconvenience, 
by  his  neglect  to  present  the  cheque  within  a  reasonable  time,  (which  is 
generally  considered  to  mean  within  the  banking  hours  of  the  day  after 
it  is  reeeived,(o))  because  bankers  in  general  understand  it  as  a  rule  of 
business  not  to  pay  old  cheques  without  inquiry ;  also  a  banker  cannot 
safely  pay  a  cheque,  the  drawer  of  which  has  died,  between  the  date  of 
delivering  the  cheque  and  its  presentment,  because  his  death  operates  to 
withdraw  the  banker's  authority  to  pay  :(p)  also,  although  the  drawer 
*be  still  living,  his  account  may  have  been  overdrawn,  or  he  may  ,-  ^  -. 
have  ceased  to  have  an  account  with  the  banker  in  the  interval ;  L 
and,  in  either  of  the  three  last  cases,  the  payee  might  be  obliged  to  re- 
sort to  an  action  to  recover  the  value.  Again,  the  drawer  might  in  the 
interval  have  become  bankrupt  or  insolvent,  in  neither  of  which  cases 
would  it  be  probable  that  the  payee  would  recover  the  full  value. 

On  the  other  hand,  although  where  the  payee  keeps  the  cheque,  be- 
yond a  reasonable  time,  without  presentment,  and  the  bankers  become 
insolvent  in  the  mean  time,  the  drawer  is  discharged ;  yet,  if  within 
banking  hours  of  the  day  after  he  receives  the  cheque,  the  payee  pre- 
sents it,  and  finds  that  the  bankers  have  become  insolvent,  between  his 
receipt  of  the  cheque  and  the  carrying  it  for  presentment,  the  drawer  is 
not  discharged,  and  the  payee  may  recover ;  for  here,  though  both  par- 
ties are  innocent,  yet  it  is  just  that  the  payee  should  be  paid  his  debt,  the 
right  to  which  he  has  done  nothing  to  forfeit,  since  he  has  conformed  to 
the  strictest  rule  that  applies  to  any  holder  of  a  cheque,  by  presenting 
in  the  course  of  the  day  after  his  receipt  of  it.  (5) 

2.  When  the  person,  who  holds  the  cheque,  is  not  the  payee,  but  has  re- 
ceived the  cheque  from  the  payee  or  from  some  intermediate  holder,  and 
upon  the  cheque  being  dishonoured  seeks  to  recover  from  the  person 
from  whom  he  received  it,  the  rule  is  strict  that  he  must  present  it  with- 
in banking  hours,  on  the  day  following  that  on  which  he  received  it,  at 
the  farthest,  provided  there  are  the  ordinary  means  of  doing  so.(r)  And 
the  holder  of  a  cheque,  whether  payee  or  other  holder,  does  not  obtain 
any  more  time  by  sending  the  cheque  to  his  own  bankers  and  presenting 
through  them ;  but  in  all  cases,  to  be  safe,  he  must  present  within  bank- 
Owen,  13  M.  &  "W.  64.  In  Serle  v.  Norton,  2  M.  &  Rob.  401,  the  cheque  was  dated 
19th  March,  and  was  presented  6th  April  following.  See  Robinson  v.  Hawksford, 
9  Q.  B.  52. 

(0)  Per  Littledale,  J.,  Boddington  v.  Schlenker,  4  B.  &  Ad.  752;  Pocklington  v. 
Sylvester,  reported  Chit.  Bills,  274,  (6th  edit.) 

(p)  Tate  v.  Hilbert,  2  Ves.  jun.  118.  The  banker  would  be  justified  in  paying 
if,  at  the  time,  he  had  no  knowledge  of  the  death,  S.  0.  In  case  of  non-payment 
on  ground  of  intervening  death  of  drawer,  the  holder  may  have  relief  in  equity 
against  the  banker.  Rodick  v.  Gandell,  12  Beav.  325  ;  S.  C,  1  De  G.  M.  &  G.  763. 
N.  B.— The  death  of  the  drawer  of  a  bill  of  exchange  has  no  effect  to  vary,  in  any 
way,  the  rights  and  liabilities  of  the  parties  to  the  bill,  Billing  v.  Devaux,  3  M.  & 
Gra.  571,  573,  574;  which  is  another  point  in  which  bills  of  exchange  differ  from 
cheques. 

(q)  Pocklington  v.  Sylvester,  C.  P.,  Hil.  T.,  57  Geo.  III.,  reported  Chit.  Bills, 
274,  (6th  edit.) ;  Boddington  v.  Schlenker,  4  B.  &  Ad.  752. 

(r)  Moule  v.  Brown,  4  Bing.  N.  C.  268  ;  Robson  v.  Bennett,  2  Taunt.  388. 


72 


,,KANT    ON    THE    LAW    OF    BAN  KINO. 


ing  hoars,  of  the  day  next  after  the  day,  of  the  delivery  of  *the 
"  1  oheque  to  him,  whether  he  presents  it  himself  or  by  a  servant, 
.,r  through  his  bankers.(«)  There  is,  of  course,  aothing  to  prevent  the 
drawer  agreeing  with  the  payee  to  extend  the  time  for  presentment,  by 
his  assent,  either  express  ox  implied.^)  On  the  other  hand,  Hie  payee, 
by  transmitting  a  cheque  on  another  bank  to  his  own  bankers,  has  not 
lese  time  to  present  it  in  than  he  would  have  had  if  he  had  kept  it  and 
U  himself;  and  although  the  bankers  do  not  send  it  to  the 
clearing  house  the  same  day,  the  drawer  ia  not  disoharged.(f) 

Notwithstanding  what  has  been  Btated  above,  from  the  decided  au- 
thorities, founded  on  oases  which  have  already  come  before  the  courts, 
there  can  1"-  no  doubt  that  the  drawer  would  not  be  discharged,  if  the 
oould  Bhow,  that  although  he  had  exceeded  a  reasonable  time  in 
iting  the  cheque,  still  at  ao  time  between  the  delivery  to  him  of 
the  cheque  and  the  Btopping  of  the  bank,  had  the  drawer  assets  in  the 
hanker.-'  hands  to  oover  the  amount  of  the  oheque;  or  if  he  oould  show, 
that  from  the  distance  from  the  bankers'  at  which  he  received  the  oheque, 
or  the  lateness  of  the  hour  or  other  circumstances,  he  oould  not  have  pre- 
sented the  oheque  so  as  to  anticipate  the  stopping  of  the  bank,  even 
though  he  had  actually  exceeded  the  prescribed  period  of  the  banking 
-  of  the  next  day,  &o.     The  payee  does  not  lose  his  right  to  recover, 
-  been  already  observed,  by  the  stoppage  of  the  bank  within  the 
ribed  period,  provided  his  presentment,  though  subsequent  to  the 
stoppage,  is  within  the  period.     Also,  if  it  could  be  Bhown,  that  the  hank 
had  Btopped,  to  the  drawer's  knowledge,  at  the  time  of  his  delivery  to 
the  payee  of  the  oheque,  probably  no  actual  presentment  need  be  proved, 

i.  r  to  render  the  drawer  liable.      So  the  drawer  would  he  held  liable, 
if   it   could  be  proved  that  he  had  reduced   his  account  with  the  hanker, 

below  the  amount  of  the  oheque,  before  the  closing  of  *the  hank, 
I  ''"  1  on  the  day  after  his  delivery  of  the  cheque,  or  perhaps  at  any 
time  before  presentment.^) 

Whether  the  plea  of  the  Statute  of  Limitations  would  he  a  good  answer 

to  an  action  by  the  payee  against  the  drawer  has  never  been  decided; 
but  it  seems  thai  such  defence,  in  case  of  a  cheque,  presented  more  than 
six  rears  after  delivery  to  the  payee,  might  perhaps  be  taken  under  the 
plea  of  the  Btat  ate. 

A-  -  ime  guide  with  respect  to  presentment  of  cheques  on  provincial 
hanker-,  the  following  case  may  possibly  be  usefully  detailed. 

A  oheque  for  1,3742.  was  given  on  the  20th  of  April,  in  payment  for 

tate,  to  A  .  at   Lutterworth,  drawn  on  the  Lutterworth  hank.     It 

received,  by  the  payee,  after  banking  hours.     A.  lived  three  miles 

from  Lutterworth,  and  he  handed  the  cheque  to  15.,  to  be  carried  to 

by,  and  placed  to  B.'fi  account  with  the  Rugby  bank.  Hugh)  is  six 
miles  from  Lutterworth.  On  the  arrival  of  the  oheque  at  Rugby,  the 
hank  had  closed,  but  the  cheque  was  deposited,  with  one  of  the  partners 

,  .  under  v.  Burchfield,  7  If.  A  Gra.  L061. 
(()  Boddington  v.  Bchlenki  r,  I  B.  A  Ad.  752. 

,   Btirl  '«.'.  v  T.  R.  129.    Bo  if  he  had  in  thi  meantime  ordered  the 
do!  to  pay.    v\  it  15  Jur.  mi. 


CHEQUES.  73 

of  that  bank,  for  the  night,  and  in  the  morning  of  the  21st  of  April,  it 
was  paid  into  the  bank,  and  on  the  same  day  was  transmitted,  by  post 
as  the  most  advisable  mode,  to  the  Lutterworth  bank,  with  orders  to  send 
the  amount  to  London.  The  Lutterworth  bankers  received  it  early  on 
the  22nd,  and  at  half-past  one,  P.  M.  on  that  day,  they  stopped  payment, 
without  having  cashed  the  cheque.  A  Court  of  Equity  held  that  the 
deposit  of  the  cheque,  with  the  Rugby  bankers,  was  a  reasonable  and 
proper  course,  on  the  part  of  A.,  and  consequently,  that  the  presentment 
to  the  Lutterworth  bank,  was  in  time  to  prevent  the  cheque  from  be- 
coming his  cheque,  and  that  the  debt  was  still  due  to  him.  The  Rugby 
bankers,  it  was  considered,  had  the  whole  of  the  22nd  to  present  the 
cheque  in.(«)  Here  looking  to  the  ^various  circumstances,  it  p*^-? 
might  well  be  considered  that  the  payee  did  not  receive  the  L  J 
cheque  until  the  21st,  for  he  did  not  receive  it,  so  as  to  make  it  available, 
until  that  day,  and  he  was  entitled  to  pay  it  into  his  bankers,  or  to  send 
it,  with  the  intention  that  it  should  be  deposited,  in  the  bank  at  Rugby, 
for  the  night :  as  it  would  not  there  be  exposed  to  many  risks,  which  it 
might  have  been  liable  to,  in  his  own  house ;  and  then  the  bankers  at 
Rugby  had  the  whole  of  the  next  day,  after  their  receipt  of  it,  to  present 
it  in.  Also,  it  will  be  observed,  that  the  case  falls  within  the  first  of  the 
above  rules ;  for  supposing  that  the  payee  did  not  present  the  cheque, 
within  the  next  day,  after  that  on  which  he  received  it,  still  the  stoppage 
of  the  bank  did  not  occur,  in  the  interval  between  the  receipt  of  the 
cheque  and  the  presentment,  and  consequently  the  drawer  remained 
liable.  This  decision  may,  therefore,  be  rested  on  this  latter  principle, 
independently  of  the  peculiar  circumstances  of  the  case.  But  probably 
the  proper  meaning  of  the  strict  rule,  as  to  presentment  by  the  bearer,  is 
that  the  period  of — "  the  day  after  the  receipt  of  the  cheque  by  the 
bearer" — only  begins  to  run  from  the  day,  on  which  it  was  first  possible 
for  him  to  have  presented  the  cheque;  so  that  if  a  person  receives  a 
cheque  too  late  for  presentment  to-day,  under  no  circumstances  can  he 
have  less  than  the  whole  of  to-morrow  and  the  next  day,  for  presentment; 
in  other  words,  that  "day"  means  "  day  available  for  presentment;"  other- 
wise a  person  who  received  a  cheque  on  a  Sunday,  dated  on  that  day, 
would  only  have  the  whole  of  Monday,  to  present  it  in ;  and  a  person 
who  received  a  cheque,  after  banking  hours,  on  a  Saturday,  must  bear 
the  loss,  if  the  banking  house  did  not  open  on  Monday.  It  would  seem 
reasonable,  however,  to  consider  that  he  first  received  the  cheque,  in 
each  case,  on  Monday  before  banking  hours  commenced,  and  that  he  had 
therefore,  the  whole  of  Monday  and  Tuesday  to  present  it  in ;  and  so  if 
any  other  acknowledged  public  holiday  intervened.  To  hold  otherwise 
would  either  materially  interfere  with  the  convenience  of  the  system 
*of  payment  by  cheques,  or  would  lead  parties  into  incurring  r  ^  r  -i 
the  risks  of  giving  and  taking  post-dated  cheques. (cc)  •-    l     -I 

The  following  is  a  case  of  the  same  class  as  the  one  last  detailed : — 

(«)  Bond  v.  Warden,  1  Coll.  Ch.  C.  583. 

(z)  It  has  been  observed  from  the  bench,  that  a  man  who  drawn  a  cheque  on  a 
Sunday,  usually  dates  it  for  the  Monday.  Per  Alderson,  B.,  Watson  v.  Poulson, 
15  Jur.  1112. 


-  j  QS ANT    ON    THE    LAW    OF    BANKING. 

On  the  5th  April  defendant  paid  to  the  plaintiffs,  who  were  bankers, 
a  cheque  drawn  on  the  Maidstone  bank  j  it  was  given  to  the  plaintiffs  at 
D6  of  the  Tunbridge  market,  and  they  gave  their  own  bank  notes 
hange;  they  received  it.  at  Tunbridge,  Borne  time  before  the  post 
.    on  the  5th.     Plaintiffs  kepi  it  all  the  5th  and  6th,  but  seat  it  to 
Maidstone,  by  the  carrier,  on  the  morning  of  the  7th  ;  the  carrier  reached 
Maidstone  at  nine  o'clock  on  the  7th,  but  the  Maidstone  bank  did  not 
open  on  that  day.     [f  the  oheque  had  been  sent  by  the  post,  of  the  6th, 
it  would  have  reached  Maidstone  an  hour  earlier.     At  the  trial  Gibbs, 
C.  J.,  said,  "the  plaintiffs  cannot  reooverj  they  have  been  guilty  of 
Uohee  :    I  will   nut  say  that    it  was  not  their  duty  to  have  sent  off  the 
cheque  by  the  poet  of  the  5th,  but  the  extreme  time,  up  to  which  they 
were  justified  in  keeping  it,  was  till  the  post  of  the  6th.     It  does  not 
matter   when   the    carrier  arrived;    they  must  suffer  for   their  negli- 
gence.'\.//) 

The  extreme  time  here  mentioned,  it  will  be  observed,  is  limited  in 
accordance  with  the  latter  part  of  the  second  rule,  by  which  the  bearer 
or  holder  of  the  cheque  must  present,  in  the  banking  hours  of  the  day, 
after  that  on  which,  he  received  it,  if  there  are  the  ordinary  means  of 
doing  w.  In  the  above  case  the  judge  seems  to  have  declined  saying 
expressly,  that,  considering  the  hurry  of  a  market  day,  the  bank  was 
bound  to  have  sent  the  cheque,  by  the  post  of  the  5th,  (though,  on  the 
other  hand,  he  would  not  lay  down  that  it  was  not  their  duty,)  so  as  to 
have  presented  on  the  6th  ;  but,  as  they  did  not  take  the  means  of  the 
post  of  the  6th,  of  making  what  may  be  called  an  inchoate  presentment 
*on  the  day  after  they  received  it,  the  loss  arising  from  the  stop- 
L  °  }  -I  page  of  the  Maidstone  bank,  in  the  interval  between  the  receipt 
and  presentment,  fell  upon  them. 

We  -hall  detail  another  case  of  this  class. 

The  plaintiffs  were  bankers  at  Aylesbury.  At  noon,  13th  June,  they 
discounted  for  the  defendant  a  cheque  that  he  had  received  in  payment, 
for  cattle,  from  some  salesmen  in  Smithfield,  London.  It  was  drawn, 
in  his  favour,  on  Smith  and  Co.,  bankers,  London.  The  post  for  Lon- 
don left  Aylesbury  at  <i  p.  m.,  but  plaintiffs  did  not  send  off  the  cheque 
by  that  day's  post,  but  by  a  coach  which  started  at  8  A.  M.,  of  the  14th. 
Th-  oheque  was  inclosed  to  Praed  and  Co.,  bankers,  Fleet-street,  who 
received  it  between  three  ami  Pour  o'clock  the  same  day.     They  presented 

it  at  Smith's  about  1 1  A.  M.,  on  the  15th.  The  answer  was,  -  No  effects 
— must  See  the  drawers."  The  action  was  for  money  hail  and  received  to 
recover  tie-  Bum  of  .'Jim/,  paid  by  the  plaintiffs  on  the  cheque  to  the  de- 
fendant, and  they  had  a  verdict. (.-.)  Here  the  defendant,  choosing  to 
discount  the  <dic.jue  in  the  country,  wa.s  considered  to  have  assented  to 
that  being  done  which  was  the  usual  and  necessary  course  to  procure 
payment  of  the  cheque  ;(")  and  it  appears  to  be  the  invariable  usage,  in 
the  city  of  London,  for  hankers  not  to  present  cheques,  paid  in  by  their 
customers,  until  the  day  following  that  on  which  they  are  received,  un- 

(v)  Beaching  w. ,  Holt,  N.  P.  Rep.  315. 

B  ickford  v.  Ridge,  2  Uampb.  537. 

Alexander  v.  Burchfield,  7  M.  k  Gra.  1061,  1066 


CHEQUES.  75 

less  drawn  on  bankers  eastward  of  Temple  Bar,  being  members  of  the 
Clearing  House,  in  which  case  they  are  exchanged  the  same  day.(«) 

The  following  case  may  properly  find  a  place  here,  though  it  is  less 
closely  connected  with  this  part  of  our  subject. 

On  the  17th  November,  A.  asked  B.  to  give  him  change  for  a  cheque 
for  10^.  10s.,  drawn  by  C.  on  W.  and  Co.,  bankers,  in  whose  hands  C. 
had  funds  sufficient  to  cover  the  amount.  B.  gave  the  change,  and 
kept  the  cheque  till  the  21st  November,  when  he  paid  it  into  his  bankers. 
( )n  23rd  *November,  W.  and  Co.,  stopped  payment,  without  .-  ^  -. 
having  cashed  the  cheque.  On  the  evening  of  that  day  B.  told  •-  '  J 
A.  that  the  cheque  had  been  returned,  not  telling  him  that  W.  and  Co. 
had  stopped,  which  A.  did  not  know.  A.  gave  B.  bl.  and  an  I.  0.  U. 
for  bl.  10s.,  and  took  back  the  cheque.  Held,  that  the  suppression  of  the 
fact  by  B.  that  W.  and  Co.  had  stopped,  &c,  amounted  to  such  a  fraud 
on  A.  as  entitled  him  to  recover  the  5/.  as  money  had  and  received,  and 
that  to  entitle  him  to  do  so  it  was  not  necessary  that  he  should  have 
given  or  tendered  back  the  cheque  to  B.,  Lord  Denman,  C.  J.,  saying 
the  cheque  was  not  returned,  in  the  ordinary  sense  of  the  word.(i) 

The  Presentment  must  in  general  be  made,  not  only  within  banking 
hours,  but  at  the  banking-house,  of  the  bankers,  on  whom  the  cheque  is 
drawn.  But  the  institution  called  the  Clearing  House,  and  the  practice 
of  using  it,  which  is  now  very  general,  though  not  universal,  among  the 
bankers  of  the  metropolis,  has  introduced  a  small  divergence  from  the 
rule,  which  it  may  be  worth  while  to  notice. 

The  Clearing  Rouse  is  a  large  room  fitted  with  drawers :  each  banker, 
using  the  house,  has  one  of  these,  marked  with  his  name  or  firm.  In 
the  morning,  and  at  half-past  three  o'clock  in  the  afternoon  of  each  week 
day,  a  clerk  from  each  banker,  using  the  house,  attends,  bringing  with 
him  the  cheques  on  other  banks  that  have  been  paid  into  his  bank  since 
last  clearing ;  these  he  deposits  in  the  drawers  of  the  respective  banks  on 
which  they  are  drawn ;  he  then  credits  their  accounts  separately,  with 
the  different  amounts  of  the  cheques  they  have  placed  in  hjs  drawer,  as 
against  his  bank.  Balances  are  then  struck  from  all  the  accounts,  and 
the  claims  between  the  various  banks  transferred  from  one  to  another, 
until  they  are  so  wound  up  and  mutually  cancelled,  that  each  clerk  has 
only  to  settle,  in  cash,  with  two  or  three  *others,  and  thus,  by  r^co  -i 
means  of  comparatively  small  sums  in  money,  the  balances  are  L  l  J 
immediately  paid.  "When  cheques  are  paid  into  a  bank  after  clearing- 
time,  (c)  they  are  sent  to  the  respective  houses  on  which  they  are  drawn, 
when,  if  the  bankers  intend  to  pay  them,  they  are  "  marked,"  which  is 
understood,  as  an  engagement  that  they  will  be  passed  or  paid,  at  the 
Clearing  House  next  day,(c?)  and  that  they  have  priority  before  the 
cheques  which  come  in,  on  that  day.(e) 

(a)  Alexander  v.  Burchfield,  7  M.  &  Gra.  1061,  1066. 

(b)  Billing  v.  Ries,  Car.  &  M.  26.  (c)  See  4  B.  &  Ad.  754. 

(d)  M'Culloch,  Commerc.  Diet.  voc.  Clearing  House;  see  4  B.  &  Ad.  753  ;  War- 
wick v.Rogers,  5  M.  &  Gra.  348;  Robarts  v.  Tucker,  16  Q.  B.  570  ;  Bellamy  v. 
Majoribanks,  7  Exch.  389. 

(e)  Robson  v.  Bennett,  2  Taunt.  388 ;  Stevens  v.  Hill,  5  Esp.  247. 


— , ,  i.KANT    ON    THE    LAW    OF    BANKING. 

I'm  this  praotioe,  as  above  detailed,  it  is  obvious  that  a  large  portion 
of  thf  cheques  which  are  paid  into  banks  in  London  by  customers,  in 
order  that  the  amounts  may  be  carried  to  their  accounts  as  money,  are 
never  presented  by  such  banker-,  as  bearers,  at  the  banking  bouses,  on 
which  thtv  arc  drawn  ;  but  that,  instead,  is  established  the  practice  of 
placing  them  in  the  drawers,  at  the  Clearing  Bouse,  belonging  to  the 
latter  bank-.  In  other  words,  they  arc  presented  to  the  clerks  <>f  the 
latter,  who  attend  at  the  Clearing  House  j  and  such  presentment  has 
been  held  to  be  Bumoient.(/) 

The  following  case  illustrates  both  branches  of  the  practice.  On 
September  11,  between  one  and  tun  o'clock,  the  plaintiff  received  from 
the  defendant  a  cheque  on  the  defendant's  bankers,  Bloxam  &  Co.j  the 
plaintiff  lodged  the  cheque  at  bis  bankers',  Messrs.  Harrison,  a  few 
minutes  after  four,  aud  they  presented  it  between  live  and  six  to 
Blozam  &  Co.,  who  marked  it  for  payment.  The  practice  was  proved  to 
i  above  stated.  On  the  L2th  Harrison's  clerk  took  the  cheque  to 
the  Clearing  House,  but  no  one  attended  on  behalf  of  Bloxam  &,  Co., 
who  bad  stopped  payment  at  nine  that  morning.  The  cheque  was  there- 
fore  treated  as  dishonoured.  The  plaintiff,  in  going  with  the  cheque  to 
Harrison's,  passed  Bloxam's  banking  house.    The  court  held  the  marking 

to  be  similar  to  the  accepting  *of  a  bill ;  for  it  was  an  admission 
L  l  J  of  assets,  rendering  the  banker  liable  to  pay,  and  the  same  thing 
as  if  the  banker  had  written  on  the  cheque,  "  We  will  pay  this  to-morrow 
at  the  Clearing  House."  Thus,  the  presenting  it  at  that  place  is  equi- 
valent to  presenting  it  at  the  banking  house,  and  there  was  consequently 
no  laches  in  the  plaintiff  or  his  banker,  and  the  plaintiff  had  judgment 
-t  the  defendant. (7)  It  will  be  observed  that  the  court  term  the 
marking  "to  be  similar  to  the  accepting  of  a  bill,  &O."  Now,  however, 
the  Btatute  1  &  2  Geo.  IV.  c.  78,  s.  2,  passed  subsequently  to  the  above 
decision,  enacts,  that  no  acceptance  of  any  inland  bill  of  exchange  shall 
ifficient  to  charge  any  person,  unless  such  acceptance  he,  in  writing, 
on  such  bill.  At  the  date  of  the  above  decision  the  law  had  been  held 
to  be,  that  a  verbal  acceptance  of  a  bill  of  exchange  was  binding. (A) 
Hence  that  decision  must  not  be  taken  as  extending,  at  the  present  day, 
t"  make  any  marking  an  acceptance  according  to  the  requirements  of 
tin-  statute  of  Geo.  IV.;  such  marking  only,  as  amounts  to  a  writing,  will 

Signature  is  not  essential  to  acceptance  of  a  bill  under  that 

Btatute  ;    but  if  the  word  ,!<;■,/,/<,/  lie  written  on  the  bill,  it  is  a  question 
for  the  jury  whether  the  word  was  intended  as  a  definitive  acceptance,  or 

whether  it  was  to  be  subsequently  completed  by  signature.(i)    This  haa 

been  ruled  with  respect  to  a  bill  of  exchange.    And,  probably,  if  it  were 

proved  that  a  banker  had  deliberately  marked  a  cheque  by  the  word 

•  pted,"  OT  6V(  n  1>\  the  letter  A.,  or  by  his  initials,  or  by  the  initials 

(/)  Reynolds  v.  Ohettle,  ■:  Campb.  596. 

Robson  \.  Bennett,  2  Taunt.  388.     That  cancelling  is  similar  to  acceptance. 

hut  compare  p.  66. 
Lumlej  \.  Palmer,  Stra.  LOOOj  Rep.  temp.  Hardw.  74,  S.  C. 
Dofani  v.  1  •  Mm.,  a.  k.  90  :  per  Parke,  B.,  Gorlett  v.  Conway,  5  If. 

k  W. 


CHEQUES.  77 

of  the  names  composing  the  firm,  and  it  were  shown  to  be  the  usage  or 
practice  of  the  firm  to  pay  cheques  so  marked,  the  bearer  could  recover 
against  the  banker,  who,  after  such  marking,  with  the  knowledge  of  the 
bearer,  refused  to  pay. 

If  the  bearer  banks  with  the  same  bankers  on  whom  the  ^  ^hq  -. 
*cheque  is  drawn,  no  promise  to  pay  can  be  implied  from  the  L  J 
bankers  receiving  the  cheque  without  observation,  and  keeping  it  till  the 
following  day;  for  prim  &  facie  they  will  be  taken  to  have  received  it  as 
agents  to  the  bearer,  (/r)  At  least  they  will  be  so,  where  they  had  no 
funds  of  drawer's,  in  their  hands,  at  the  time. 

But  in  a  case  where  A.  and  B.  severally  kept  accounts,  at  the  same 
bank,  and  A.  pays  in  a  cheque,  in  his  favour,  drawn  by  B.,  who  was,  at 
the  time,  considerably  indebted  to  the  bank,  and  the  bankers  received 
the  cheque  without  observation,  and  on  the  same  day  received  moneys 
on  account  of  B.,  and  paid  cheques  drawn  by  him,  and  on  the  next  day 
received  moneys  on  his  account,  but  in  each  case  appropriated  those 
moneys  to  other  claims  upon  B.,  and  they  had  written  to  A.  saying  that 
they  had  not  carried  the  cheque  to  his  credit,  but  would  retain  it,  by 
them,  in  the  hope  of  its  being  provided  for,  and  promised  B.  that  they 
would  pay  it  when  they  had  funds ;  it  was  held,  A.  might  recover  from 
the  bankers  the  amount  of  the  cheque,  in  an  action  for  money  had  and 
received, (A  the  bankers  having  had  funds  of  B's  in  their  hands  subse- 
quently to  the  receipt  of  the  cheque,  sufficient  to  have  paid  it,  but  for 
their  appropriation  of  them  to  other  claims  on  him. 

The  cancelling  above  spoken  of,  seems  to  have  been  understood  by 
the  witnesses  in  the  different  cases,  and  by  the  courts,  as  meaning  mark- 
ing as  for  payment;  but  by  statute  55  Geo.  III.  c.  184,  s.  19,  it  is  im- 
perative on  every  banker  who  pays  a  cheque,  to  cancel  it,  under  a  penalty 
of  50^. ;  this  sort  of  cancelling  means  crossing  with  lines. 

The  following  case  may  properly  close  this  part  of  the  subject: — 

Three  customers  of  bank  A.  draw  three  several  cheques  *upon  r  *(>->-, 
it,  and  pay  them  away  to  creditors ;  all  the  three  having,  at  the  L  J 
time,  considerably  overdrawn  their  respective  accounts.  These  cheques 
came  into  the  hands  of  another  bank  B.,  who  mark  them  as  paid,  (in 
other  words  cancel  them,)  and  enter  the  amounts  to  the  debit  of  the 
drawers  severally.  B.  remit  to  A.  the  cheques,  inclosed  in  a  printed 
circular,  desiring  the  amount  of  them  to  be  paid  to  the  London  corres- 
pondents of  B.  However,  notwithstanding  this  circular,  the  practice 
between  the  two  banks  is,  to  pay  one  another's  cheques,  so  far  as  circum- 
stances permit,  by  remittances  of  notes  of  the  bankers  sending  the 
cheques,  directed  to  these  bankers,  the  understanding  being,  however, 
that  the  cheques  should  be  paid  on  the  day  on  which  they  are  received, 
or  on  the  day  following,  either  by  such  remittances,  or  by  remittances 
according  to  the  circular.  A.  gave  B.  credit  on  their  books  for  the 
amount  of  the  cheques,  but  stopped  payment  three  days  after  receiving 

(k)  Boyd  v.  Emmerson,  2  A.  &  E.  184;  see  Kilsby  v.  Williams,  5  B.  &  A.  816; 
Clark  v.  Adair,  cor.  Lord  Mansfield,  cited  4  T.  R.  343  ;  Stevens  v.  Hill,  5  Esq.  247  '; 
De  Bernales  v.  Fuller,  14  East,  590,  n.  (a),  598. 

(I)  Kilsby  v.  Williams,  5  B.  &  A.  815. 


78  GRANT  ON  THE  LAW  OF  BANKING. 

tin  in,  and  without  havibg  made  any  payment  or  remittance  in  reepeet 

of  them,  knowing,  at  the  time,  of  receiving  the  cheques,  that  their  bank* 

rupt  v  was  inevitable.     The  dates  were  as  follows: — On  14th  July  the 

cheques  were  Bent  to  A.,  who  got  them  on  the  L5th  (as  it  seems  in  the 

morning;)  through  that  day  and  the  L6th,  they  went  on  doing  business 

is  usual;  they  never  opened  after  the  16th.     It  seemed  indisputable, 

that  if  the  largest  of  the  three  oheques  had  been  presented  on  that  day, 

for  payment  over  the  oounter,  they  would  have  paid  it, 

ise  the  drawer  had  given  them  security,  sufficient  to  cover  all  he 

was  previously  in  their  debt,  ji/h.<  the  amount  of  that  cheque.     The 

of  the  firm  A.  obtain  payment,  from  the  customers,  of  the  full 

■mount    of  the   cheques.      Held,    that   B.   were  entitled   to   payment,   in 

full,  of  the  amount)  nut  of  the  bankrupts'  estate,  and  that  A.  ought 
either  t<>  have  remitted  tin'  money  on  the  L5th  or  16th  to  B.,  or  to  the 
I.      i  .n  correspondents  of  13.,  or  have  returned  the  cheques  to  B.(»i) 
r  *•.)-!       *Stak   Cheqtu — It  i.-  well  settled,  and  maybe  regarded  as 

L  "J  a  fixed  rule,  that  the  indorsee  of  an  ordinary  bill,  or  note,  takes 
it  with  the  equities  that  attach  to  it,  in  the  hands  of  the  person,  from 
whom  he  received  it ;  but  whether  the  bearer  of  a  cheque  is  affected  by 
the  same  rule,  seems  to  have  been  laid  down,  with  some  variation,  at 
different  times. 

In  a  case  where  a  cheque  for  50/.  was  casually  lost  by  the  payee,  and 
it  was  tendered,  five  days  after  its  date,  in  payment  for  goods  at  a  shop, 
and  tin-  shopkeeper  took  it  and  gave  change  out  of  it,  and  next  day  pre- 
sented  the  cheque  and  received  cash  fur  it,  and  a  verdict  was  found  for 
the  payee,  in  an  action  for  money  had  and  received  against  the  shop- 
keeper; the  court  treated  cheques  as,  on  the  same  touting  in  this  respect, 
a-  hill-  and  notes,  holding  that  the  person  tendering  the  cheque,  not 
having  any  title,  could  not  transfer  a  title,  (n)  But  in  a  later  case,  where 
the  cheque  had  been  fraudulently  obtained  from  the  drawer,  and  a 
trading  firm,  to  whom  it  was  handed,  six  days  after  date,  had  given  cash 
for  it,  and  afterward-  presented  it  and  received  the  amount  at  the 
banker's,  the  drawer  jailed  to  recover  against  the  trading  firm,  in  an 
action  for  money  had  ami  received,  and  it  was  said  not  to  be  true,  as  a 
matter  of  law.  that  a  party  taking  a  cheque  overdue  has  it  with  the 
lame  title,  ami  no  other,  a-  the  person  from  whom  he  receives  it,  though 
the  rule,  it  was  allowed,  was  certainly  so  with  respect  to  bills  of  exchange 
ami  promissory  ootes./o) 

The    rule    i-    -aid.    in    a    Work    of  great    authority. ( /-)  to    be    generally 

applicable  to  oheques  on  bankers,  but  that  it  nil]  not  apply  to  oheques 
which  appear  to  have  been  issued  long  after  their  date.  There  i-  an 
obvious  distinction   betwei  n  a  bill  or  note  having  a  fixed  day  for  pay- 


(»!             •    Cole,  3  M.  D.  &  D.    39,  197,  per  Knight  Bruce,  V.  C. 

Down  v.  Hailing,  A  B.  i  or.  Abbott,  0.  .J..  Bayley,  Holroyd,  Js. 

Rothschild      I  I               II,  per  Lord  Tenterden,  0.  J.,  Little- 
dale,  J. 

Bills,  cap.  v.  p.  3,  citing  Boehm  \.  Sterling,  7  T.  R.  423,  where  the 

:  eh.-. |ucs,  that  i1  ties  are  the  Bame,  as  with  regard 
to  billa  of  exchan 


CHEQUES.  79 

snent,  which  is  taken  *when  over  due,  and  a  cheque  found  in  -  ^  -. 
circulation  long  after  its  date;  in  the  first  case,  suspicion  of  L  -» 
necessity  attaches;  in  the  latter,  suspicion  may  or  may  not  justly  arise, 
according  to  circumstances;  whether  it  does,  is  for  the  jury  to  say; 
the  staleness  of  a  cheque  may  be  a  ground  on  which  they  may  infer 
fraud  ;  but  there  does  not  seem  to  be  any  rule  of  law  which  points  out, 
any  given  degree  of  staleness,  as  evidence  conclusive  on  that  point,  (g) 

So  gross  negligence  may  be  considered,  by  the  jury,  to  be  shown  in 
the  circumstances  under  which  a  person  takes  a  stale  cheque  as  cash ; 
viz.  negligence  of  the  duty,  which  those  circumstances  imposed  upon 
him,  of  inquiring  into  the  connection  between  the  bearer  and  the  par- 
ties named  on  the  cheque,  and  if  he  has  been  guilty  of  such  negligence,  . 
they  may  consider  him  to  have  been  a  fraudulent  taker ;  but  no  rule  of 
law,  it  would  appear,  lays  down,  with  respect  to  such  a  cheque,  what 
has  been  formerly  laid  down,  in  the  case  of  a  party  taking  a  promissory 
note  after  the  date  at  which  it  was  made  payable  in  the  body  of  it ;  that 
the  taking  it,  after  it  was  due,  is  a  suspicious  circumstance,  from  which 
the  law  infers  that  the  taker  had  knowledge,  of  some  infirmity  in  the 
title  of  the  holder,  and  therefore  takes  it,  subject  to  all  the  objections  to 
which  it  was  liable,  in  the  hands  of  the  person  from  whom  he  took  it.(r) 
On  the  contrary,  it  is  now  definitively  settled,  that  if  a  man  take  honestly 
an  instrument  made  payable  to  bearer,  he  has  a  good  title  to  it,  with 
whatever  degree  of  negligence  he  may  have  acted  that  is  consistent  with 
the  idea  of  his  honesty;  his  negligence  may  have  been  gross;  the  jury 
may  thence  infer  his  fraud ;  thus  the  proposition  becomes  altered,  and 
of  course  the  fraudulent  taker  of  a  cheque  acquires  no  title.  Still  gross 
negligence  only  would  not  be  held,  by  a  court,  at  the  present  .-  ^ .  -. 
*day,  to  be  a  sufficient  answer,  where  the  taker  had  given  consi-  L  J 
deration.  Gross  negligence  may  be  evidence  of  mala  fides,  but  it  is  not 
the  same  thing,  (s) 

Still  there  may  be  such  gross  negligence  as  to  render  bankers  liable, 
without  any  imputation  of  fraud  or  mala  fides;  thus,  where  a  customer's 
eheque  was  presented,  which  had  evidently  been  torn  in  pieces,  and 
pasted  together  again,  the  bankers  having  paid  the  cheque,  were  held 
liable  to  the  drawer.  Here  the  negligence  consisted,  apparently,  in  want 
of  inquiry,  to  see  whether  the  drawer  had  not  revoked  the  cheque,  which 
its  appearance  indicated  he  had  done. (2) 

The  rules  and  practice  with  respect  to  the  limits  of  time,  beyond 
which,  in  certain  cases,  presentment  of  a  cheque  ought  not  to  be  made, 
have  been  stated ;  it  remains  to  observe,*  on  the  other  hand,  that 
bankers  are  not  justified  in  paying  a  cheque  which  is  presented  to  them, 
be/ore  the  day  on  which  it  purports  to  have  been  drawn,  or  bears  date, 

(q)  See  Dehors  v.  Harriott,  1  Show.  164;  Brown  v.  Davies,  3  T.  R.  80;  Taylor 
v.  Mather,  id.  83,  n.;  Sturtevant  v.  Forde,  4  Sc.  N.  R.  670 ;  Banks  v.  Colwell,  cited 
3  T.  R.  81 ;  per  Parke,  B.,  9  M.  &  W.  17,  18. 

M  Amory  v.  Mereweather,  2  B.  &  C.  578. 

(a)  Goodman  v.  Harvey,  4  A.  &  E.  870 ;  Uther  v.  Rich,  10  A.  &  E.  784  ;  Byles 
on  Bills,  126,  (6th  edit.)  These  cases  seem  to  overrule  Snow  v.  Peacock,  2  Car.  & 
P.  221. 

(t)  Scholey  v.  Ramsbottom,  2  Campb.  485. 

January,  1857. — 7 


- 


QBAN1  OH  THE  LAW  OF  BANKING. 


loing  they  render  themselves  liable  to  the  penalty  of  1007., 
sed  by  the  Stamp  Act,  as  above  Btated,(u)  for  paying  a  post-dated 
cheque;  but  besides,  in  circumstances,  they  may  be  liable  to  pay  ovei 
the  amount  of  tin-  cheque,  ex.  gra.,  if  it  have  been  lost  by  the 
.  the  banker  must  repay  him,  it  being  out  of  the  usual  course  of 
banking  business,  to  cash  oheques,  before  the  day  of  the  date  ;(.<■)  at  least 
•!.    banker  would  be  liable  to  do  so,  if  the  payee  could  show  that  he 
the  cheque,  not  knowing  thai  it  was  post  dated;  otherwise,  being 
Ldden  by  the  Stamp  Act  (passed  Bince  the  decision  last  referred  to, 
whioh  dates  a.  d.  177<'>,)  under  a  penalty,  to  take  Buch  a  cheque  know- 
ingly, be  would  *not  be  able  to  reeover.      The  banker,  however, 
I  ie  besides,  prevented  by  the  express  words  of  the  statute,  from 
allowed  the  amount  of  the  cheque  in  account  with  the  drawer,  &c 
•  I  .  the  other  band  do  days  of  grace  are  allowed  on  presentment  of  a 
cheque.(y) 

Cheques  drawn,  by  the  Treasury,  on  the  Bank  of  England,  are  not 
payable  after  three  o'clock  r.  M.(z)  and  they  usually  bear  a  memoran- 
dum, to  this  effect,  printed  at  the  top  of  the  paper  on  which  they  are 
draw  n. 

A  cheque  of  the  ordinary  kind  is  strictly  payable,  or  at  least  intended 

to  be  paid,  immediately  on  demand;  and  this  appears  to  be  universally 

.  with  the  exception  of  cheques  drawn  on  bankers  in  the  city  of 

L  radon,  where  the  usage  of  trade  establishes  the  rule,  that  a  cheque  may 

bained  by  the  banker,  on  whom  it  is  drawn,  until  five  o'clock  p.  >i. 

of  the   day  on  which   it  is   presented,  and  if  there   be   no  assets,  it  may 

then  be  returned  to  the  person  presenting  it,  and  that  too,  although  it 

have  been,  in  the  first  instance,  by  mistake  cancelled,  as  intended  to  be 

honoured.      Thus,  where  plaintiff  paid  into  the  bank  of  Y.  &  Co.  a  cheque 

drawn  upon  defendant's  house,  and  Y.'s  clerk  took  it  to  the  Clearing 

B       -  to  be  paid,  and  put  it  into  defendant's  drawer,  and  received  it  back 

five  o'clock  cancelled,  but  with  memorandum,  cancelled  by  mis- 

i\  written  under,  and  it  was  proved  that  several  cheques,  drawn  by 

person,  had  been  paid,  on  that  day,  but  that  wdien  the  cheque 

in  question  came  ill,  the  clerk  who  received   it  immediately  cancelled  it, 

thinking  it  was  to  be   paid,  but  finding,  in  a  few  minutes,  that  no  more 

..*'  such  cheques  were  to  1"-  paid,  wrote  the  memorandum  above  men- 

d.  and  it  was  returned  to  V.'s  clerk  accordingly.     Held  that,  not- 

standing  the  cancelling,  the  defendant,  according  to  tin-  usage  proved 

trial,  had  until  five  o'clock  to  return  it,  and  that,  having 

I    SO  returned  it,  this  amounted  to  a  refusal  to  pay. (A)      This    case 

(u)  Supra,  p.  IT. 

Da  Silva  v.  Fuller.  MS..  Ghitt.  Hill-.  148,  (6th  edit.,)  cited  per  Parke,  B., 

Culverwell,  7  If.  .v  W.  it-  :  Bee  Marin-,  31,  (4th  edit.)     Quaere,  liow  the 

n    tonaible  to  the  pay  1 1  ■  Bayley,  Bills, 

edit.)    The  doctrine  applies  where  the  bearer  is  a  mere  agent  of  the 

i  wlio  has  countermanded. 

'!..    erv.  Whitaii.  8  B.  .v  0.  409;  Button  v.  Toomer,  7  B.  &  C.  416. 

Will.  IV.  e.   16,  -.  21. 

(      -■  ■  per  Bnller,  J.,  Leftley  \.  Mill-,  i  T.  It.  175. 

Fernandey  v.  Glynn,  1  Campb.  i:r>-  n.j  Bee  Turner  v.  Mead,  Stra.  116;  Bay- 
.  Bank  of  England,  Bl 


CHEQUES.  81 

shows  that  cancelling  does  not  operate  like  acceptance,  for  it  was  further 
said,  in  the  case,  that  had  it  been  a  bill  of  exchauge  sent  for  acceptance 
and  accepted,  no  change  of  circumstances  could  have  altered  that  fact.M 

Also  knowledge  of  the  bankruptcy  or  stoppage,  of  the  banker,  on 
whom  the  cheque  is  drawn,  seems  to  be  a  dispensation  with  present- 
ment,^/) and  as  a  banker  paying  a  cheque  without  a  stamp,  where  a 
stamp  is  requisite,  is  expressly  prohibited  from  being  allowed  the  amount 
in  account  with  the  drawer,  and  is  also  made  liable  to  a  penalty,  it  would 
seem  that  the  payee,  who  inadvertently  takes  such  a  cheque,  might  re- 
cover against  the  drawer  (without  showing  that  he  had  presented)  on  the 
original  consideration ;  for  it  would  be  idle  to  require  him  to  show,  as 
the  condition  of  his  recovering  on  the  consideration,  that  he  had  pre- 
sented the  cheque  to  a  person  who  was  forbidden  by  law  to  cash,  he  him- 
self being  also  forbidden  to  receive  the  cash  for  it. 

When  proceeding  on  the  cheque  itself  the  payee  may  sue  the  drawer, 
either  in  assumpsit  or  debt,(e)  and  in  general  it  is  necessary  to  show 
notice,  to  defendant,  of  nonpayment  by  the  bankers,(/)  but  such  want 
of  notice  is  excused  by  stating  and  proving,  that  the  bankers  had  no 
assets  of  the  defendant's,  and  that  defendant  had  sustained  no  damage 
for  want  of  notice  ;{ij\  the  latter,  however,  of  these  allegations  seems  not 
to  be  essential//*)  but  this  is  not  quite  clear,  *for  there  are  de-  r*p~-i 
cisions  which  point  both  ways  ;(i)  it  is  therefore  safer  to  retain  it.   L         J 

Bankruptcy. — Bankruptcy  of  the  drawer  has  been  already  intimated 
to  be  a  good  ground  of  refusal,  by  the  bankers,  to  honour  his  cheques. 
In  fact  bankers  stand,  in  no  different  position,  as  regards  the  laws  of 
bankruptcy,  from  any  other  of  the  subjects;  and,  therefore,  they  are 
liable,  like  all  other  persons  who  pay  money  to  a  bankrupt,  after  know- 
ledge of  an  act  of  bankruptcy,  to  be  obliged  to  pay  it  over  again,  to  the 
assignees.  Hence,  if  a  banker,  after  knowledge  of  an  act  of  bankruptcy 
committed  by  a  customer,  nevertheless  honours  his  cheques,  the  banker 
will  be  liable  to  repay  the  money  to  the  bankrupt's. assignees;  for  know- 
ing of  the  act  of  bankruptcy,  the  bankers  have  imputed  to  them  the  know- 
ledge of  the  legal  consequence  of  the  act,  which  is,  to  render  the  party 
no  longer  a  free  agent,  and  deprive  him  of  the  right  to  dispose  of  his 
property  ;(&)  they  are  taken  to  know  that  they  were  not  bound  to  pay  his 
cheques  in  such  circumstances,  and  that,  by  doing  so,  they  were  aiding 
in  defrauding  the  creditors. 

The  only  remedy  of  the  assignees  seems  to  be  the  above,  against  the 
bankers ;  they  cannot  sue  the  creditor  to  whom  the  cheque  was  delivered 

(c)  Fernandey  v.  Glynn,  1  Campb.  426,  n.  In  this  case,  as  has  been  observed, 
Cox  v.  Troy,  5  B.  &  A.  479,  per  Holroyd,  J.,  the  cheque  was  not  in  reality  can- 
celled by  mistake,  but  with  the  intention  to  pay  it :  but  circumstances  leading  the 
bankers  to  change  their  minds,  the  drawer  only  was  liable. 

(d)  Camidge  v.  Allenby,  6  B.  &  C.  373,  as  explained,  Robson  v.  Oliver,  10  Q.  B. 
704. 

(e)  Simpkin  v.  Pothecary,  5  Exch.  253. 

(/)  Treacher  v.  Hinton,  4  B.  &  A.  413.  (g)  Kemble  v.  Mills,  9  Dowl.  446. 

(h)  Carter  v.  Flower,  16  M.  &  W.  750 ;  see  9  Q.  B.  52. 

(i)  Trueman  v.  Fenton,  5  D.  &  L.  28  ;  Jones  v.  Broadhurst,  9  C.  B.  190. 

(k)  Vernon  v.  Hankey,  2  T.  R.  119. 


GEANT  OS  THE  LAW  OF  BANKING. 

:in,l  the  money  paid  on  it.  he  not  knowing  of  any  act  of  bankruptcy.  (/) 
Nor  is  it  a  valid  excuse,  for  the  banker,  that  he  pays  to  a  creditor  who 
does  lift  know  of  the  aet  of  bankruptcy,  bo  whom,  therefore,  a  direct 
payment  by  the  trader  would  stand  good.(m)  At  all  events,  if  the 
assignees  recover  from  the  bankers  the  amount  of  a  cheque,  paid  to  a 
creditor  of  the  trader,  in  the  above  circumstances,  they  cannot  also  re- 
cover it  from  the  creditor,  *though  the  creditor,  when  he  received 
I  the  money,  knew  of  the  act  of  bankruptcy,  (n) 

Crossed  Cheques. — In  the  metropolis,  and  in  many  other  places,  it  is 
a  common  practice  for  a  person  drawing  a  cheque,  to  write  across  the 
cheque  the  name  of  a  banker,  ordinarily  the  banker  of  the  party  in  whose 
favour  it  is  drawn.  The  into  ntion  of  this  is,  to  advertize  the  bankers  upon 
whom  the  cheque  is  drawn,  thai  tiny  are  to  cash  the  cinque  only  to  or  in 
favour  of  the  hanker,  whose  name  BO  appears  written  across  the  instru- 
ment ;  its  legal  effect  we  shall  discover  presently  ;  the  reason  for  adopting 
the  precaution  is  to  prevent  its  being  paid  to  a  wrongful  bearer,  ex.  gra., 
mie  who  has  found  it,  or  got  possession  of  it  by  fraud,  &c,  or  felony. 

If,  however,  a  cheque  so  crossed  is  handed  on  to  another  person  as 
bearer,  there  is  no  objection  it  seems  to  his  erasing  the  name  of  the 
b anker  that  he  finds  upon  it,  provided  he  substitutes  the  name  of  another 
banker.(o) 

Again,  it  is  not  unusual  to  write  across  the  cheque and  Co., 

leaving  a  blank  space  on  the  left  hand  side  of  the  word  and,  in  order 
that  it  may  be  filled  with  the  name  of  the  banker,  through  whom  the 
payee,  or  anyone  to  whom  he  may  pass  the  cheque,  intends  that  the 
cheque  Bhould  be  presented  ;  and  when  bo  crossed,  as  in  the  former  case, 
the  bankers  on  whom  the  cheque  is  drawn  have  been  in  the  habit,  in 
London  and  other  places,  of  refusing  cash  for  the  cheque,  if  it  were  pre- 
sented otherwise  than  through  the  banker  :  and  so  if  the  blank  were  not 
filled  up,  the  practice  has  been,  that  it  was  only  paid  when  presented 
througb  >"//"  banker. 

Qtering  upon  the  inquiry  of  what  is  the  effect,  as  regards  the 
I  negotiability,  of  a  cheque  which  has  been  thus  treated,  it  will  be  de- 
sirable to  Btate  that  such  crossing  *has  not  the  effect  of  affecting 
L  '"  J  the  bankers  whose  name  is  written  across  it,  and  into  whose  bank 
it  \b  paid,  with  knowledge  that  the  Sum  mentioned  in  it,  is  the  money  of  the 
pay'-,  in  all  circumstances.  Thus,  when  I '.  drew  a  (die.nn'  on  his  banker, 
payable  to  A.  and  1>..  assignees  of  P.,  and  crossed  it  with  the  name  of  a 
banker,  with  whom  they  had  an  account  as  assignees:  15.,  who  had  a 
private  account  with  the  same  bankers,  paid  in  the  cheque  to  that 
account ;  the  court  held,  that  the  bankers  were  justified  in  applying  it 
to  that  account,  because,  according  to  the  usage  of  trade  and  of  bankers, 
the  crossing  with  the  name  of  the  payee's  bankers,  was  no  notification 

to  them  that  tin    money  W8S  the  money  of  the  payee.(p) 

Kathewv.  Bherwell,  2  Taunt  439 ;  B.  0.,  l   Rose,   lis.     This  case  shows 
th.it  ;i  paid  cheque  i-  of  do  value. 

Vernon  \.  Hankey,  2  T.  II.  1 17. 

m  v.  Hankey,  2  T.  R.  287.  Stewart  v.  Lee,  M.  &  Malk.  168 

•  . .  i..  e,  M.  ft  tfalk.  168. 


CHEQUES.  83 

It  had  been  very  solemnly  decided  that  the  crossing  of  a  cheque 
payable  to  bearer  with  the  name  of  a  banker,  whether  made  by  the 
drawer  or  the  bearer,  does  not  restrict  the  negotiability  of  the  cheque  to 
such  banker  or  to  a  banker  only ;  but  in  law  it  operates  as  a  mere 
memorandum,  that  the  holder  is  to  present  it  for  payment  though  some 
banker.  Such  crossing  being  made  for  the  protection  of  the  owner  of 
the  cheque,  the  payment  of  a  crossed  cheque,  otherwise  than  through 
a  banker,  would  be  strong  evidence  of  negligence,  in  case  the  person 
presenting  proved  not  to  be  the  lawful  owner  of  it.  If  it  was  doubly 
crossed,  that  afforded  no  additional  evidence  against  the  banker,  in  an 
action  by  the  drawer  for  money  lent  to  hiru.(g') 

There  was,  it  was  held,  no  obligation  on  a  banker  on  whom  a  cheque 
is  drawn,  arising  either  from  usage  or  otherwise,  (in  the  absence  of  a 
special  usage  or  a  special  agreement  to  that  effect,)  to  pay  a  cheque  only 
through  the  banker,  with  whose  name  they  find  it  crossed  in  their 
customer's  handwriting ;  consequently  they  were  not  liable  to  an  action 
at  the  suit  of  the  drawer,  as  for  a  violation  of  duty,  if  they  pay  it  other- 
wise, although  the  drawer  may  have  been  in  ^consequence  of  .-  ^-q  -, 
such  payment  by  them,  subject  to  a  loss,  at  least  in  a  case,  where  L  J 
the  drawer  gives  opportunity  to  the  fraud  upon  him,  by  making  the 
cheque  payable  to  a  person  who  was  never  intended  to  take  the  money 
for  himself,  but  was  in  truth  a  mere  servant,  to  carry  the  cheque  to  the 
bank,  with  whose  name  the  drawer  had  crossed  the  cheque,  the  payee 
having  struck  out  that  name,  and  crossed  the  cheque  with  the  names  of 
his  own  bankers,  to  whom  the  cheque  was  cashed,  and  from  whom  he 
obtained  the  proceeds. (r) 

In  such  an  action  by  the  drawer,  the  jury  had  found  that  there  was 
such  a  usage  of  bankers  in  the  metropolis,  as  gave  rise  to  a  duty  of  the 
above  nature,  viz.,  a  duty  not  to  pay  through  other  hands  than  into  and 
through  the  hands  of  the  bankers,  whose  name  was  written  across  the 
cheque  by  the  drawer,  but  the  court,  on  the  ground  that  the  evidence 
given  at  the  trial,  in  support  of  the  alleged  usage,  was  not  satisfactory, 
set  aside  the  verdict  for  the  plaintiff,  and  ordered  a  new  trial. (s)  The 
question  is  of  so  much  importance  to  bankers,  and  persons  who  draw  or 
receive  cheques  upon  bankers,  that  it  seems  desirable  to  state  at  some 
length  the  reasoning  of  the  court  in  delivering  judgment.  It  should  be 
observed,  that  the  drawer  had  crossed  the  cheque  with  the  words 
u  Bank  of  England  for  the  account  of  the  Accountant- General." 

"Payment  by  cheques,  (the  court  observed,)  has  now  almost  entirely 
superseded  all  other  modes  of  payment  in  large,  and  is  in  very  general 
use  in  smaller  money  transactions ;  and  the  practice  of  crossing  them 
with  the  names  of  bankers,  the  effect  of  which  is  the  question  in  the 
present  case,  is  also  in  very  general  use,  and  occurs  in  very  many  instances 

(q)  Bellamy  v.  Majoribanks,  7  Excb.  389. 

(r)  Bellamy  v.  Majoribanks,  7  Excb.  389.     In  that  case  the  bank  to  whom  the 

drawer  intended  that  the  cheque  should  be  carried  by  the  person  named  as  payee 

•  was  the  Bank  of  England,  whose  habit  was  proved  to  be,  and  to  be  well  known 

among  the  London  Bankers,  to  reject  all  payments  by  cheques  not  drawn  upon  the 

Bank  of  England  itself.     The  drawer  seems  to  have  been  aware  of  their  rule. 

(*)  Bellamy  v.  Majoribanks,  7  Exch.  389. 


v  j  Q BANT    ON   THE   LA  W    0  I"    B  A  X  K  I R  G. 

r*-i  -i  eTe,y  day,  n0*  u,llv  '"  London,  but  in  Beveral  *other  parts  of 
i-  '  J  the  kingdom,  [t  therefor* — ms  to  us  to  be  of  great  importance 
that  the  effect  of  these  oroasingi  should  be  rightly  understood." 

•  •  The  plaintiffs  first  oontended  that  the  erossing  of  the  cheque  to  the 
•  Hank  of  England/  in  the  manner  in  which  it  was  crossed,  absolutely 
restricted  the  negotiability  of  the  instrument,  and  rendered  it  payable  to 
the  Hank  of  England  alone, and  even  to  the  account  mentioned,  namely, 
•the  Accountant-General,'  ami  to  no  other  person;  and  that  a  binding 
:i  or  usage  to  that  effect  was  proved.  We  arc  of  opinion  no  such 
nr  custom  was  proved.  Without  going  the  length  of  saying  that 
there  was  no  evidence  to  go  to  the  jury  of  the  existence  of  such  a  custom, 
we  think  that  the  weight  of  evidence  was  against  it.  A  custom,  such 
as  that  alleged  in  the  first  oount,  would  be  binding  and  obligatory  on  all 
Dgaged  in  a  certain  trade,  because  long  and  universally  acted 
upon  by  all  persons  in  such  trade,  who  may,  therefore,  reasonably  be 
presumed  t<>  have  made  their  contracts  upon  the  faith  of  it.  The  custom 
alleged  could  only  be  proved  by  a  long,  well-known,  acknowledged  and 
universal  usage  and  practice  among  bankers  to  act  in  accordance  with  it. 
Bo  far  from  this  being  the  case,  many  witnesses  called  from  the  different 
London  banking  houses  by  the  plaintiffs,  and  all  called  by  the  defend- 
ant-, denied  its  existence.  That  there  was  any  special  usage  between 
the  plaintiffs  and  Messrs.  Coutts,  which  would,  of  course,  govern  their 
ictions,  was  never  once  suggested.  The  banking  business  in  London 
is  not  in  very  many  hands,  and  all  the  witnesses  on  both  sides  were  per- 
sons of  unimpeachable  integrity  and  veracity,  and  it  seems  to  us  quite 
absurd  to  suppose  that  there  could  be  any  custom  creating  such  a  duty 
as  that  alleged  in  the  first  count,  and  absolute  and  binding  by  reason  of 
long  and  universal  usage  on  all  the  bankers  in  the  metropolis,  without 
those  gentlemen  being  well  acquainted  with  it.  The  verdict  was,  there- 
fore,  npon  this  point,  unsupported  by  the  evidence." 
.-*_.-,-,  *"  We  are  also  of  opinion  that  such  a  custom,  if  proved  to  have 
~ -I  existed  in  fact,  would  be  incapable  of  being  supported  in  point 
of  law.  The  crossing  a  cheque  could  not  operate  as  an  indorsement  to 
B  banker,  whose  name  is  used,  because  it  was  not  written  with  any  intent 
to  transfer  the  property  in  the  cheque  to  him,  and  it  wants  the  essential 
part  of  an  indorsement,  the  delivery  of  the  instrument  to  the  indorsee. 
And  we  think  that  it  cannot  be  well  supposed  that  the  usage  is  to  be 
considered  a<  equivalent  to  the  direction  by  the  holder  or  drawer  to  the 
drawee,  not  to  pay  to  the  bearer,  but  to  a  particular  person  only — for 
then  the  cheque  would  be  altered  in  a  manner  which  would  take  it  out 
ol  the  exemption  of  the  Stamp  Act,  53  Geo.  III.  c.  184,  sohed.  1,  which 

applies  to  cheques   payable  to  bearer  Only,  and  the  bankers,  to  whom    it 

addressed,  could  not  be  bound  to  pay  to  the  person  named.     We 

berefore,  of  opinion  that  the  crossing  the  cheque,  with  the  name  of 

a  bank.-r,  could  not  have  the  effect  of  restricting  its  negotiability  to  such 

a  banker  only.     To  hold  it  to  have  this  effect,  would  be,  to  render  the 

instrument  no  longer  a  cheque/' 

•■  *    the  ( fleet  of  crossing  a  cheque  is  not.  in  our  opinion,  to  restrain 
ability  of  the  cheque,  it  will  be  lit  to  consider  what  it  probably 


CHEQUES.  85 

is,  that  the  attention  of  the  jury  may  be  directed  to  that  question  on  the 
new  trial.  It  was  agreed,  on  all  hands,  that  the  practice  of  Grossing 
cheques  originated  at  the  Clearing  House ;  the  clerks  of  the  different 
bankers  which  do  business  there,  having  been  accustomed  to  write 
across  the  cheques  the  names  of  their  employers,  so  as  to  enable  the 
Clearing  House  clerks  to  make  up  the  account.  It  was  quite  clear  that 
this  had  nothing  whatever  to  do  with  the  restriction  of  the  negotiability, 
for  at  the  time  when  this  was  done,  the  cheques  were  in  the  course  of 
payment  there,  on  presentation  for  payment,  and  all  their  negotiability 
was  at  an  end.  The  establishment  of  the  Clearing  House  is  compara- 
tively modern,  and  was  within  the  memory  of  several  of  the  witnesses. 
It  afterwards  became  a  common  ^practice  to  cross  cheques  which  .-  ^  -. 
were  not  intended  to  go  through  the  Clearing  House  at  all,  with  "- 

the  names  of  a  banker,  or  with  the  words  " &  Co.,"  leaving  the 

rest  in  blank,  and  a  custom  or  usage  has  certainly  sprung  up  in  regard 
to  this  also.  All  the  witnesses  agreed  as  to  the  fact  of  the  existence  of 
such  a  custom,  and  we  think  that  the  great  preponderance  of  evidence 
on  both  sides  tended  to  show  the  custom  to  be  that  which  is  reported  to 
have  been  stated  by  some  of  the  jury  in  the  case  of  Stewart  v.  Lee,(t) 
namely,  that,  when  a  cheque  is  crossed,  bankers  generally  refuse  to  pay 
it  to  any  one  except  a  banker,  and  if  they  do  pay  it  to  a  person  not  a 
banker,  they  consider  that  they  do  it  at  their  peril,  in  the  event  of  the 
party  to  whom  the  payment  is  made  not  being  entitled  to  receive  it ; 
that  the  object  is  to  secure  the  payment,  not  to  any  particular  banker, 
but  to  a  banker,  in  order  that  it  may  be  easily  traced,  for  whose  use  the 
money  was  received ;  and  that  it  was  not  intended  thereby  at  all  to 
restrict  the  circulation  or  negotiability  of  the  cheque,  but  merely  to 
compel  the  holder  to  present  it  through  a  quarter  of  known  respectability 
and  credit.  We  are  strongly  inclined  to  think,  on  a  full  inquiry,  the 
usage  will  turn  out  to  be  no  more  than  this ;  and,  considering  the  custom 
in  this  point  of  view,  the  crossing  is  a  mere  memorandum  on  the  face 
of  the  cheque,  and  forms  no  part  of  the  instrument  itself,  and  in  no  way 
alters  its  effect.(w)  There  can  be  no  doubt  that  such  a  usage  is  highly 
beneficial  to  the  public." 

The  law  was  held  to  be,  that,  however  general  be  the  practice  of  crossing 

cheques  with  the  form  " &  Co.,"  or  with  the  name  of  a  banker,  the 

negotiability  of  a  cheque  payable  to  bearer  was  not  thereby  affected,  so 
that  any  one  who  took  such  cheque,  and  bona  fide  gave  value  for  it,  was 
entitled  to  the  money  he  got  for  it,  through  his  bankers,  from  the  bankers 
on  whom  it  was  drawn.  Hence,  if  a  person  who  *had  received  ,-  ^  .  -. 
a  cheque,  crossed  as  above,  in  payment  of  debt,  sent  it,  by  his  L  J 
clerk,  to  pay  into  his  bankers',  but  the  clerk,  instead  of  doing  so,  got  the 
amount  from  A.  B.,  then,  if  A.  B.  acts  bona  fide,  he  is  not  liable  to  re- 
pay to  the  clerk's  master  the  sum  he  gets,  through  his  bankers,  for  the 
cheque,  (x) 

(t)  Moo.  &  M.  158. 

(u)  See  Fitch  J.  Jones,  24  L.  J.,  Q.  B.  293,  where  effect  of  a  memorandum  on  a 
promissory  note  was  considered. 

(x)  Carlon  v.  Ireland,  25  L.  J.,  Q.  B.  113.     The  origin  of  crossing  cheques  is 


..LANT    ON     THE    L.WV     OF    BANKING. 

Booh  baying  been  adjudged  to  be  die  law  on  this  subject,  a  statu* 
has  been  lately  passed  to  altei  it ;  we  have  Btated  the  law  as  it  was,  be- 
cause it  is  always  indispensable  to  the  clear  understanding  of  a  new  role, 
ceding  an  old  one,  to  be  accurately  informed  of  the  terms  ut*  the  old 

one      The  statute(y)  is  as  follows  : Whereas  doubts  have  arisen  as  to 

bligations  of  bankers  with  respect  to  cross-written  drafts  :  and  where- 
as  it  would  conduce  to  the  ease  of  commerce,  the  security  of  property, 
and  tli«'  prevention  of  crime,  if  drawers  or  holders  of  drafts  on  bankers, 
payable  to  bearer,  or  to  order  on  demand,  were  enabled  effectually  to  di- 
rect the  payment  of  the  same,  to  be  made  only,  to  or  through  some 
banker:  be  it  therefore  enacted,  &c.  : 

•  •I.  In  every  case  where  a  draft  on  any  hanker,  made  payable  to  bearer 
or  to  order  on  demand,  bears  across  its  face  an  addition,  in  written  or 
stamped  letters,  of  tie'  name  of  any  hanker,  or  of  the  words  'and  com- 
pany,' in  full  or  abbreviated,  either  of  such  additions  shall  have  the 
of  a  direction  to  tie'  bankers,  upon  whom  such  draft  is  made,  that 
t!l('  .-aine  is  to  be  paid  only,  to  or  through  some  banker,  and  the  same 
-hall  he  payable  only,  to  or  through  some  banker. 

••  II.  In  the  construction  of  this  act,  the  word  'banker'  shall  include 
any  person  or  persons,  or  corporation,  or  joint  stock,  or*  other  company, 
acting  as  a  hanker  or  bankers." 

<:,-/,,,/  Cheque. — Let  us  next  consider  what  is  the  proper  mode  of 
disposing  of  a  cheque  after  it  has  been  cashed. 

Fir-t.  as  has  been  pointed  out,  the  banker  must  cancel  it;  *but 

J  is  the  hanker,  or  the  drawer,  entitled  to  the  possession  of  it?   We 

seen  that  when  a  cheque  is  dishonoured,  it  is  "returned"  in  the 

technical  phrase,  with  "no  effects/'  or  some  words  to  that  effect,  marked 

upon  it  :(-. )  and  this  is  the  import  of  the  word  returned,  as  understood»in 

this  connection,  among  hankers  and  traders.     When  the  banker  hands 

to  tie-  customer  tie'  cheque  he  has  drawn,  after  it  has  been  cashed, 

this  restoration  i>  not  known  as  a  «  return"  of  the  cheque.  In  fact,  how- 
such  restoration  always  takes  place;  the  bankers'  duty  being  to  re- 
the  cheque,  after  cashing  it,  to  the  customer  who  has  drawn  it  upon 

him.     A  banker  has  no  more  right  to  a  cheque,  which  he  has  honoured, 

than  the  payee  of  a  hill  of  exchange  has  to  the  hill  when  paid.     It   i.-. 

always  considered  that  the  cheque  is  the  property  of  the  drawer  when 

paid,(o)  and  before  tie'  cheque  is  handed  hack  to   the   drawer   it.   is   con- 

■  I  t..  ]•<■  iii  lii.-  possession j  the  banker, /or  this  purpose,  being  bis 
•.  tie-  possession  of  the  banker  is  therefore  his  possession ;(&)  and 

fore  where  the  drawer  is  one  of  the  parties  to  an  action,  a  notice  to 

en  the  practice  of  the  clerks  nt  tie-  clearing  house  to  write  on  the 
eheqne  th<-  name  of  tin-  bank  that  deposited  it  in  tie-  dray  er  at  tin'  clearing  hoosi 
!li-t.  Banking,  2 L6. 
•  •  .v  20  v.,  i.  c.  25,  (Roy.  \--.  23rd  June,  l«5G.) 
Warwick  \  M.  .v  Gra.  348,  3  I!'. 

Per  Wilde,  0.  J.,  2  Den.  Cr.  Cas.  2 1  :  Beg.  v.  Watts,  \\  lure  it  was  shown  to 
tin  1-  .    .j  civn'.-  banking-house  to  return  the  cheques  to  the  customers 

I'!,  j:'.    Bee  ease  where  they  were  returned  quarterly,  Bodenham  v.  Pur- 
B   a    \    41,  42. 
•     Ml. .at.  c.  J..  Partridge  K<.    £;  M.  ICG. 


CHEQUES.  87 

produce,  is  all  that  is  necessary,  to  get  the  paid  cheque  before  the 
court,  (c) 

This  is  the  rule  with  respect  to  all  cheques  drawn  in  the  usual  mode ; 
that  is,  drawn  by  a  customer,  who  has  deposited  funds  in  the  bankers' 
hands,  and  draws  against  such  funds. 

There  may,  however,  be  instances,  but  it  probably  may  be  alleged  to 
be  seldom  that  they  occur  in  practice,  where  a  cheque  is  drawn,  with  the 
intention  that  it  should  remain  in  the  bankers'  hands,  after  he  has  paid 
out  the  amount  of  it,  as  a  kind  of  security  for  the  repayment,  on  which  he 
may  be  able,  if  necessary,  to  proceed  against  the  customer.  Such  a  case 
is  the  following  :  Two  brothers,  A.  and  B.,  applied  to  *a  banker  r-*^  -, 
for  a  loan  of  500?. ;  the  banker  agreed  to  lend  the  money,  pro-  >-  -• 
vided  a  third  brother,  C,  would  join  them  in  giviug  security  for  the  ad- 
vance; C.  agrees  to  this;  and,  in  pursuance  of  such  arrangement,  A.,  B. 
aud  C.  sign  a  cheque  in  this  form,  "Pay  selves  or  bearer  £500.  A.  B. 
C,"  and  on  delivery  of  this  cheque  to  the  bank,  500?.  was  paid  out  to 
them.  C.  dies,  leaving  A.  and  B.  his  executors.  The  banker  sues  A. 
and  B.  as  such  executors,  for  the  amount  due  to  him,  in  respect  of  prin- 
cipal and  interest,  on  the  cheque.  The  result  is  judgment  by  default, 
and  execution,  under  which  28?.  5s.  is  levied  on  the  goods  of  C  The 
widow  of  C,  shortly  after  his  death,  deposited  with  the  banker,  the  title 
deeds  of  certain  real  estate  of  C,  as  security  for  the  amount  due  on  the 
cheque.  A.  and  B.  were  both  in  distressed  circumstances  at  this  time, 
and  possessed  of  no  property  whatever,  and  unable  to  pay  what  was  due. 
Then  a  bill  is  filed  in  equity,  by  the  banker,  for  an  account  of  what  was 
due,  for  principal  and  interest,  against  A.  and  B.,  praying  that  an  account 
of  the  personal  estate  of  C.  might  be  taken,  and  if  that  should  be  found 
insufficient,  &c,  then  that  the  real  estate,  or  a  competent  part  of  it,  should 
be  sold,  and  the  debt  paid  out  of  the  proceeds.  For  the  banker  it  was 
contended  that  the  liability  created  by  borrowing  the  500?.  was  joint  and 
several,  and  consequently  that  the  defendants,  as  executors,  were  liable 
to  pay  the  sum  due ;  but  the  court  held  that  the  banker  was  not  entitled 
to  the  relief  claimed,  and  that  such  a  cheque  only  showed  a  joint  debt, 
aud  not  a  joint  and  several  debt,  if  the  case  was  put  on  the  footing  of  the 
cheque  itself,  without  reference  to  the  consideration  whether  C.  were  a 
surety  or  not.  The  court  also  expressed  a  clear  opinion  that  if  an  action 
had  been  brought  in  the  lifetime  of  C.;  against  him  alone,  or  against 
either  A.  or  B.,  it  could  not  have  been  maintained,  without  breaking- 
down  the  distinction  between  a  joint  debt  and  a  joint  and  several  debt.(fZ) 
The  *banker  was  obviously  ill-advised ;  he  takes  a  security  which,  r  .,._-  -, 
as  against  the  party  to  whom  he  gives  credit,  is  practically  una-  L  -» 
vailable ;  he  ought  to  have  taken  a  joint  and  several  bond,  or  a  joint  and 
several  promissory  note, (e\  or  C.'s  guarantee,  on  either  of  which  he  might 

(c)  Burton  v.  Payne,  2  Car.  &  P.  520. 

(d)  Other  v.  Iveson,  24  L.  J.,  Ch.  654,  (Kindersley,  V.  C.;)  S.  C,  3  Drew.  177. 
The  position  in  Thorpe  v.  Jackson,  2  Y.  &  C.  553,  that  a  joint  loan  creates,  in 
equity,  a  joint  and  several  debt,  was  denied  in  Jones  v.  Beach,  2  De  G.  M.  &  G. 
886,  (Lords  Justices,  assisted  by  Maule,  J.,)  and  also  by  Kindersley,  V.  C,  in  the 
case  stated  above. 

See  Pease  v.  Hirst,  10  B.  &  C.  122  ;  Manley  v.  Boycott,  22  L.  J.,  Q.  B.  265, 


£g         GRANT  OH  THE  LAW  OF  BANKING. 

Ikiw  :  I  judgment,  which  (the  proper  Bteps  haying  been  taken,) 

would  have  bound  the  real  property  of  C,  and  bo  the  principal,  int.  rest 
and  oostB  might  have  been  realised. 

It  i  served  that  when  a  joint  and  Beveral  instrument  is  taken, 

by  hanker-,  a-  a  security  fur  a  loan  to  a  customer,  who  is  one  of  the 
parties  to  the  instrument,  the  other  or  others  executing  it  as  sureties,  it 
may  he  well  (ami  probably  the  practice  18  often  so)  that  the  hankers 
should  expressly  warn  the  latter  parties,  that  they  will  be  treated  and 
considered,  in  all  respects,  as  principals,  in  regard  to  liability  on  the 
instruments/)  Such  a  course  i-  desirable,  because  it  would  preclude 
any  prospect,  in  case  the  bankers  were  driven  to  sue  such  surety  on  the 
instrument,  of  a  successful  defence  being  made,  by  him,  on  the  ground 
that  he  delivered  the  instrument  to  them,  as  surety  merely,  and  that 
they  agreed  to  receive  it.  from  him,  as  surety  merely.  Without  such 
precaution  there  are  circumstances  in  which  such  an  answer  to  an  action 
might,  perhaps,  be  available ;(/)  if  the  precaution  is  taken  no  circum- 
stances can  he  imagined,  in  which  it  is  at  all  probable,  that  such  defence 
could  succeed. (/) 

Reverting,  then,  to  the  subject  of  the  right  of  the  drawer  to  have  sent 
back  to  him.  by  the  hankers,  all  cheques  drawn  by  him,  on  them,  which 
they  have  paid,  we  come  to  inquire  into  the  reason  and  object  of  the 
rule.  Now  the  reason  of  the  rule  is  immediately  seen,  when  we  come  to 
r+-  , -,  consider  that  *the  cheque,  hearing  the  tokens  of  having  been 
L  ''  -I  cashed,  by  the  hanker,  affords  evidence,  when  produced,  of  the 
money,  for  which  it  is  drawn,  having  been  paid,  according  to  the  require- 
ment of  the  drawer,  by  the  drawee;  it  i-.  therefore,  the  drawer'.-  proof, 
or  voucher,  of  the  payment  of  the  debt,  due  to  the  payee  of  the  cheque. 
"When  the  drawer  draws,  on  his  own  account,  against  his  own  moneys 
deposited  with  the  bankers,  the  cheque,  in  its  cancelled  Btate,  is  his 
evidence,  against  the  payee,  that  the  debt  has  been  discharged.  When 
the  drawer  draws  on  a  fund,  in  the  hanker'-,  which  he  is  specially  em- 
powered, in  respect  of  some  office,  or  situation  which  he  holds,  to  draw 
upon,  it  i-  hi-  voucher,  as  against  his  constituents,  to  whom  the  fund 
belongs,  that  their  debt  to  the  payee  has  been  duly  discharged.  In 
either  case  equally,  the  cheque,  or  the  piece  of  paper,  is  the  property  of 
the  drawer.  Tim.-  in  the  latter  case,  if  a  person  steals  the  cashed  cheque 
he  may  he  indicted  for  the  larceny  of  the  piece  of  paper,  and  it  is  proper 
and  essentia]  to  lay  the  property  in  the  drawer  of  the  cheque,  as  shown 
on  the  face  of  the  instrument  itself;  and  this  is  so  though  the  drawers 
of  the  cheque  are  the  directors  of  an  unincorporated  company,  and  the 
money  drawn  against  is  the  money  of  the  body  of  shareholders  of  the 
company,  and  the  person  indicted  is  one  of  the  shareholders  and  filled  a 
situation  under  the  com]. any,  which  made  him  the  servant  of  the 
director.-. (yj    There  the  defendant  had,  probably,  forged  the  cheque, 

wbicfa  case  ihowi  that  it  is  no  defence,  by  a  party  to  a  joint  aim  Beveral  promis- 
sory note,  m  show,  that  he  signed  merely  as  Burety,  and  without  consideration  for 

making  tie-  at 

Si  i  pi  r  enriam,  22  L.  -I..  Q.  B.  208. 
(<j)  Beg.  v.  Watt.-,  2  Den.  Cro.  0.  1 1.  22. 


CHEQUES.  89 

and  had  appropriated  the  proceeds  to  his  own  use,  and  from  that  circum- 
stance, and  as  the  cheque  had  already  heen  cashed  when  he  stole  it,  the 
court  held  he  could  not  be  convicted,  on  a  count  charging  the  larceny  of 
"  an  order  for  the  payment  of  money,"  which  is  the  proper  mode  of  de- 
scribing a  cheque  in  indictments. 

A  creditor,  it  has  been  observed,  may  always  object  to  a  cheque  when 
offered  as  payment ;  but  the  decisions  have  gone  further  than  that,  for  if 
a  creditor  is  offered  in  payment  *of  his  debt,  either  cash  or  a  ^  ^  -. 
cheque  upon  a  banker,  from  the  agent  of  the  debtor,  who  offers  L  J 
the  payment,  and  the  creditor  prefers  the  cheque  and  it  is  dishonoured, 
this,  of  itself,  does  not  discharge  the  debtor,  although  the  agent  fails 
with  a  balance  of  the  principal's,  in  his  hands,  to  a  larger  amount.(/t) 

Where,  however,  a  creditor  takes  a  cheque  drawn  by  an  agent  of  the 
debtor,  on  his  (the  agent's)  own  bankers,  in  payment  of  a  debt,  due  to 
the  creditor,  from  the  debtor,  (that  he  does  so  being  unknown  to  the 
debtor,)  and  also  gives  a  receipt  to  the  agent,  as  for  the  money  due  from 
the  principal,  in  consequence  of  which  the  principal  deals  differently 
with  the  agent,  on  the  faith  of  such  receipt,  the  principal  is  discharged, 
although  the  cheque  is  afterwards  dishonoured,  the  agent  becoming  in- 
solvent. It  is  otherwise,  however,  if  the  principal  do  not  show  that  he 
was  injured,  by  means  of  such  false  voucher  and  the  omission  of  the  cre- 
ditor to  inform  him  of  the  truth  in  due  time.(^) 

In  this  case  we  may  perceive  the  presence  of  the  principle,  that  where 
there  is  a  loss  and  the  question  arises  on  which  of  two  innocent  parties 
is  it  to  fall,  the  answer  is,  on  that  one  of  the  two  whose  conduct  has 
contributed  to  bring  about  the  loss :  but,  in  order  to  make  the  principle 
applicable,  obviously  it  must  first  be  shown,  that  a  loss  has  actually 
occurred,  and  this  would  not  be  shown,  in  the  above  case,  unless  the 
principal  proved  that,  on  the  agent's  passing  his  accounts,  he  had  had 
credit  given  him,  as  for  the  payment  of  this  debt,  on  the  ground  of  the 
receipt  proving  that  it  was  discharged.  If  it  were  shown,  however,  it 
would  manifestly  be  unjust  that  the  principal  should  be  obliged  to  pay 
the  money  over  again. 

Cheques  as  Evidence. — Where  the  plaintiff  was  tenant,  and  the  de- 
fendant land  steward,  of  a  proprietor  of  land,  and  *the  defendant  .-  ^  -. 
had  received,  from  a  railway  company,  a  sum  of  money,  to  be  L  -" 
handed  over  to  the  plaintiff,  as  compensation  for  injury  done  to  his  tem- 
porary interest,  as  tenant,  by  the  company's  works,  and  the  defendant 
had  drawn  a  cheque,  for  15?.,  upon  his  bankers,  in  favour  of  the  plaintiff, 
which  the  plaintiff  had  presented  to  the  bankers,  and  got  the  cash  for, 
from  them ;  but  there  was  no  evidence  that  the  cheque  had  been  de- 
livered, by  the  defendant,  to  the  plaintiff:  held,  notwithstanding  this, 
that  the  cheque,  upon  being  produced  by  the  defendant,  in  a  cancelled 
state,  was  evidence  of  the  payment  to  the  plaintiff  of  the  15?.  (&)  Here, 
it  will  be  observed,  there  was  independent  evidence  to  establish  the  fact 
of  money  being  due,  from  the  defendant,  to  the  plaintiff :  without  a  con- 

(h)  Everett  v.  Collins,  2  Campb.  515. 

(t)  Wyatt  v.  Marquis  of  Hertford,  3  East,  147. 

(k)  Mountford  v.  Harper,  16  M.  &  W.  825. 


GRANT  ON  THE  LAW  uF  BANKING. 

sideration  for  delivering  the  oheque,  and  the  circumstances  undei  which 
it  i*  delivered,  arc  shown,  the  proof  of  the  delivery  and  payment  of  a 
cheque,  to  a  party,  is  not  sufficient  to  prove  a  debtj(l)  so  that  to  produce 
a  oheque,  drawn  by  the  defendant,  is  not  an  admissible  mode  of  enforc- 
ing against  him  an  alleged  debt,  due  to  the  plaintiff.  But  the  produc- 
E  a  cancelled  cheque,  after  it  has  been  shown  aliunde,  that  there 
was  due  from  the  drawer  a  debt  to  the  plaintiff,  before  the  date  of  the 
delivery  to  him  of  the  oheque  drawn  in  his  favour,  is  always  evidence 
of  payment,  without  explicitly  tracing  the  oheque  from  the  drawer  to 
the  ]■ 

Another  instance  of  the  value  of  cancelled  cheques,  as  evidence,  is  the 
following: — On  a  certain  day  A.  had  a  claim,  toa  certain  amount,  on  B., 

('.  aiel  I'.,  partners.  Many  months  afterward-.  II.  BignS  a  cheque  for  a 
larger  sum,  in  the  name  of  himself  and  ('.  and  D.,  which  was  proved  to 
have  passed  through  A/a  hands,  and  to  have  been  appropriated  by  him. 
In  an  action  by  A/s  executors,  against  the  partners,  for  the  original 

r*  fii  -\  °hdm,  it  was  held  that  the  cheque  *vrs& primd  facii  evidence  of 

payment ',   hut  there    being  other  circumstances,  from  which  a 

loan  i'<>r  its  amount  might  be  inferred,  it  was  left  to  the  jury,  whether 

the  cheque  represented  a  loan  from  B.  alone,  or  from  the  partnership. (m\ 

It  may  be  convenient  to  add  here  some  further  instances  in  which 
cheques  are  available  in  evidence. 

Many  bankers  are  in  the  habit  of  supplying  their  customers  with 
printed  forms,  in  blank,  of  cheques,  which  is  convenient  for  the  custo- 
mers, as  saving  time  and  trouble,  and  is  also  useful  for  both  partii 
increasing  the  difficulty  of  forging  or  alterim:  cheques.  It  is  also  not 
unusual,  upon  a  change  in  the  firm  of  a  banking  house,  which  adopts  this 
practice,  to  alter  the  printed  form  of  the  cheque  accordingly,  andtosup- 
ply  to  their  customers  the  altered  form,  in  order  that  it  may  be  used  by 
them,  for  the  future,  instead  of  the  old  one.  Such  alteration  in  the  name 
and  Btyle  of  the  firm,  when  made  in  the  printed  form  supplied,  has  been 
held,  at  Nisi  Prius,  to  constitute  a  sufficient  notification  of  the  change, 
to  a  customer  to  whom  the  altered  form  has  been  delivered,  and  who  has 
uaed  it  in  drawing  chequee.(n) 

The  Bank  of  England  require  their  customers  to  use  the  engraved 
forms  of  cheques,  which  they  supply,  otherwise  they  refuse  the 
chequ< 

A  oheque  has  been  shown,  upon  the  authority  of  various  decisions,  to 
Imiasible,  when  cancelled,  as  evidence  of  payment,  the  existence  of 
tin-  debt,  ami  other  oircumstancea  relating  to  the  giving  of  the  cheque, 
being  prei  iously  shown  ;  but  it  i<  not,  therefore,  to  be  concluded  that  the 
drawing  of  a  oheque  in  favour  of  a  creditor  by  the  debtor,  and  the  de- 
livery ofil  i"  the  farmer,  operate  p,  ,-  .-,.  &g  payment,  for  a  cheque  is  not 
money. (y,j  oor  IS  it  a  legal  tender;   the  creditor  may  always  object  to  it 

(/)  Auhcrt  v.  Walsh,  j  Taunt  ...  Bandilands,  Gow.  It.  15,  as  cor- 

•  I.  per  Alderson,  B.,  L6  If.  h  W. 
■  il  v.  Bmith,  <■  Car.  A  P 

I  ampb.  117.  (o)  See  >;  <";ir.  k  P.  730. 

irtbrup,  1  B.  &  C  0. 


CHEQUES.  91 

as  payment,  and  if  he  has  *done  so,  when  it  was  delivered  to  r-  ^^  -. 
him,  he  may  sue  for  the  original  debt,  although  he  retains  the  L  "-I 
cheque.  (5) 

It  lias,  on  various  occasions,  been  made  a  question,  at  what  period  an 
attorney's  bill  of  costs  and  charges  was  paid,  in  consequence  of  the  en- 
actment G  &  7  Vict.  c.  73,  s.  21,  restricting  applications  to  tax  such 
bills,  to  be  made  within  twelve  months  after  payment;  and  where  bills 
of  exchange  or  promissory  notes  having  some  time  to  run  have  been 
given  in  payment,  the  twelve  months  have  been  held  to  commence  from 
the  time  when  the  bills  or  notes  were  honoured,  not  from  the  time  they 
were  given,  unless  they  were  treated,  by  the  parties,  as  payment  when 
given  :(>•)  and  the  same  would,  in  all  probability,  be  held  in  case  of  a 
cheque,  if  ever  the  delay  of  the  payee  to  present  it  for  payment  should 
have  made  the  interval,  between  the  delivery  of  the  cheque  to  him  and 
the  cashing  it,  wide  enough  to  make  it  worth  while  to  raise  the  question. 
But,  as  every  consideration  that  can  be  imagined  would,  in  such  case, 
operate  to  accelerate  the  presentment  of  the  cheque,  it  is  very  unlikely 
that  in  practice  the  case  should  arise. 

"With  respect  to  the  Statute  of  Limitations,  it  has  been  held,  that  when 
a  bill  of  exchange  or  promissory  note  has  been  given,  in  part  payment  of 
a  debt,  in  such  circumstances  as  to  raise  the  implication  of  a  promise  to 
pay  the  balance,  the  defence  of  the  Statute  of  Limitations  is  answered,  as 
from  the  time  of  such  delivery  of  the  negotiable  security,  whatever  after- 
wards becomes  of  it.(.s)  The  question  in  the  case  deciding  the  above 
was,  whether  a  bill  of  exchange,  drawn  by  the  plaintiff,  and  accepted  by 
the  defendant  in  part  payment  of  an  antecedent  debt,  was  sufficient  to 
take  the  case  out  of  the  statute,  and  the  court  determined  that  it  was, 
and  upon  principles  and  reasoning  which  seem  to  apply  equally,  to  part 
^payment,  by  a  cheque,  although  a  cheque  is  not  properly  a  ne-  r  ^^q  -1 
gotiable  security,^)  but  is  always  understood  to  be  an  order  for  L  -I 
speedy,  if  not  an  immediate,  payment  of  inoney.(tt) 

"Where,  however,  a  purchaser,  at  a  sale,  gives  a  cheque  for  the  amount 
of  the  deposit  required  by  the  conditions  of  sale,  he  may  resist  an  action, 
on  the  cheque,  on  any  grounds  which  would  have  enabled  him  to  re- 
cover, at  law,  the  deposit,  if  made  in  money,  (v) 

Again,  to  establish  a  petitioning  creditor's  debt,  it  is  not  enough  to 
show  that  a  cheque  was  drawn  by  him,  in  favour  of  the  trader,  before 
the  bankruptcy ;  it  must  be  proved  that  the  amount  of  the  cheque  was 
paid  by  the  petitioning  creditor's  bankers.  (jA  It  seems,  upon  principles 
recognized  in  the  courts  of  equity,  that  the  payee,  or  bearer,  of  a  cheque 
is  the  equitable  assignee  of  a  chose  in  action ;  that  is,  of  the  debt  due, 
by  the  banker,  to  the  drawer,  and  therefore  that  he  might  prove  against 

(q)  Hough  v.  May,  4  A.  &  E.  954. 

(r)  Saver  v.  Wagstaff,  5  Beav.  415  ;  In  re  Harries,  13  M.  &  W.  3  ;  see  In  re  Peach, 
2  D.  &  L.  36. 

(a)  Turney  v.  Dodwell,  23  L.  J.,  Q.  B.  137. 

It)  See  13  M.  &  W.  64.  («)  Smith  v.  Ferrand,  1  B.  &  C.  19. 

(v)  Per  Parke,  B.,  in  Mills  v.  Oddy,  6  Car.  &  P.  735 ;  see  Spiller  v.  Westlake,  2 
B.  &  Ad.  155. 

(x)  Bleasby  v.  Crossley,  3  Bing.  430. 


GRANT  ON  THE  LAW  OF  BANKING. 

(he  creditor  in  respect  of  the  cheque,  if  unpaid  on  presentation,  the 
banker  having  funds.(y)  And  ae  the  men  drawing  of  a  oheque,  on  his 
bankers,  by  A.  in  favour  of  B.,  is  oot  per  Be  evidence  of  a  loan  of  so 
much  from  A.  to  lb,  neither  is  a  oheque  drawn  by  B.  on  his  bankers  in 
favour  of  A.,  without  proof  that  it  was  presented  and  paid,  evidence  of 
debt,  fox  money  lenl  by  A.  to  B.(a) 

Also,  as  we  haw  Been,  the  ordinary  relation  of  customer  and  banker, 
is  that  of  creditor  and  debtor  respectively,  consequently,  where  a  banker 
is  the  petitioning  creditor,  the  production  of  cancelled  cheques,  drawn 
on  him  by  the  trader,  *before  the  bankruptcy,  is  prima  facie  evi- 
L  ■"  J  denoe  of  a  payment  of  a  debt,  due  from  the  banker,  to  the  custo- 
aot  of  a  loan  made  by  the  banker  to  him,  nor  can  such  effect  of  this 
evidence  be  countervailed,  and  the  existence  of  a  loan  established,  so  as 
to  constitute  a  petitioning  creditor's  debt,  without  the  clearest  proof  that 
the  trader's  account,  with  the  bank,  was  overdrawn  at  the  time  the 
cheques  were  honoured.(a)  It  does  not  appear  to  have  been  contended 
in  this  case,  that  the  circumstance  of  the  banker  having  retained,  in  his 
own  hands,  these  cashed  cheques,  contrary  to  the  practice  in  the  case  of 
cheques  drawn  in  ordinary  circumstances,  and  the  trader's  submitting  to 
bankers  doing  so,  in  contravention  of  what  would  have  been  his 
right,  if  the  cheques  had  been  drawn  in  the  ordinary  course,  was  evi- 
dence to  show  a  loan  from  the  banker.  The  banker,  in  that  case,  would 
have  a  right  to  retain  the  cheques,  because  to  part  with  them  would  be, 
to  put  beyond   his   control,  the  only  conclusive  evidence  he  might  have 

of  the  Loan,  beyond  the  entries,  in  his  own  1 ks  corresponding  with  the 

cheques,  which  would  be  perhaps  "pen  to  the  objection, that  to  let  them 
in  would  be,  to  allow  the  making  of  evidence  in  a  man's  own  favour. 

In  all  oases  Of  loans  to  Customers,  BOme  security,  independent  of 
cheques  of  the  character  of  those  just  mentioned,  ought,  if  possible,  to 
to  be  taken  by  the  banker. 

Bankruptcy. — Again,  with  respect  to  the  operation  of  a  cheque  as 
constituting  an  act  of  bankruptcy,  where  a  firm,  having  formed  the  reso- 
lution to  Btop  payments,  on  the  same  day  draws  cheques  on  their  bank- 
i  rs,  in  favour  of  certain  creditors,  (one  of  whom  was  their  solicitor,  who 
had  not  senl  in  his  bill,)  without  any  pressure,  and  giving  these  creditors 

time  to  carry  their  cheques  to  the  bank,  and  gi  t  oash  for  them,  in  about 

half  an  hour  after  drawing  and  delivering  *the  cheques,  Bends 
L       J  word  to  the  bankers,  to  pay  oo  more  cheques,  &o.  on  account  of 

the  firm;  it  w;i-  held,  in  equity,  that  this  was  the  transfer  of  a  debt,  due 

from  the  bankers,  to  the  linn;  that  is,  that  it  was  a  transfer  of  money, 
and   BO  WBS  within    6  Geo.   IV.  0.    L6,  B.  8,  wlii<  h    makes   any  fraudulent 

transfer,  or  delivery,  of  any  of  the  trader's  goods  and  chattels,  with  in- 

(,,)  Bee  Etodick  v.  GandelL,  12  Bear.  325 ;  1  De  (;.,  M.  &  (;.  7C3.    See  Bylcson 

Bills,  17,  and  note- (g).    To  give  an  action  al  Law  the  debtor  most  consent  to  the 

anient.    Ti  G  •  L.  h  B,  115;  Warwick  i  i  M.  tc  Gra. 

v.  Davis,  1  M.  .v  Bol 
■  In  r  v.  Manning,  12  M.  <v  \V.  579,  where  the  cheques  were  retained  by 
inker,  M  in   Other  v.  ipra,  p.  1<J,  OS   the    banker's   evidences   of  a 

loan. 


CHEQUES.  93 

tent  to  defeat  or  delay  creditors,  an  act  of  bankruptcy ;  for  that  money 
might  well  be  considered  to  come  within  the  meaning  of  "goods"  in 
that  section  ;(&)  and  such  a  transaction  would  probably  be  considered,  at 
the  present  day,  to  be  a  fraudulent  preference,  under  the  circumstances, 
and  not  to  be  protected  by  the  133rd  section  of  the  Bankrupt  Act  of 
1849,  but  to  fall  within  the  proviso  of  that  section,  and  to  be  invalid  as 
"  a  payment." 

Insolvency. — The  like  would  also,  it  seems  probable,  be  held  to  be 
the  operation  of  a  cheque,  under  the  Insolvent  Debtors'  Act,  1  &  2 
Vict.  c.  110,  s.  59,  namely,  that  it  was  a  transfer  of  money  or  property 
within  the  terms  of  that  enactment,  if  the  party  were  found  to  be  in 
insolvent  circumstances,  &c.  at  the  time  of  drawing  and  delivering  the 
cheque,  (c) 

The  following  transaction  was  held,  in  the  circumstances,  not  to 
amount  to  a  fraudulent  preference. 

A.  &  Co.  are  bankers,  in  an  embarrassed  condition,  and  about  to  stop 
payment.  B.,  who  is  father-in-law  of  A.,  has  a  private  account  with  the 
bank ;  he  is  also  one  of  the  managing  directors  of  an  assurance  company, 
who  also  bank  with  A.  &  Co. 

A.  mentions  the  embarrassed  state  of  the  bank  to  B.'s  son,  telling 
him  the  bank  would  shortly  stop  payment;  and  it  *was  then  i-^op-i 
agreed,  between  them,  that  B.'s  private  balance,  amounting  to  L  J 
about  2,000?.  should  be  drawn  out ;  but  A.  desired  that  B.  would  not 
give  any  information,  of  the  matter,  to  a  certain  shareholder  of  the  com- 
pany, as  he,  A.,  did  not  wish  the  directors  to  know  anything  about  it. 
In  consequence  of  this  information,  B.'s  private  account  was  drawn  out 
the  following  day,  which  was  Monday.  In  the  evening  of  that  day  A. 
saw  B.,  and  informed  him  of  the  state  of  the  house,  and  that  they  could 
not  go  on  beyond  Wednesday  then  next.  B.  in  consequence  filled  up  a 
cheque,  for  the  amount  of  the  company's  account,  (about  8,000?.)  and 
sent  his  son,  with  it,  to  another  of  the  directors,  by  whom  it  was  signed, 
and  on  the  following  morning  presented  and  cashed.  On  the  Wednesday 
A.  &  Co.  stopped  payment,  and  became  bankrupts.  In  an  action,  by 
their  assignees,  against  the  secretary  of  the  assurance  company,  to 
recover  the  above  sum,  as  paid  by  way  of  fraudulent  preference,  the  jury 
on  the  above  facts,  found  that  it  never  was  the  intention  of  the  bank- 
rupts, (none  of  whom,  but  A.,  knew  of  the  communication,)  that  B. 
should  draw  out  the  company's  balance,  but  only  his  own ;  and  found  a 
verdict  for  the  defendant;  and  the  court  held  there  was  no  fraudulent 
preference,  and  nothing  more  than  an  ordinary  payment  on  a  cheque. (c?) 

In  this  case  the  fraudulent  preference  seems,  in  truth,  to  have  con- 
sisted in  the  communication  to  B. ;  and  if  the  assignees  had  sued  B., 

(b)  Ex  parte  Simpson,  De  G.,  Bank  Rep.  9,  per  Knight  Bruce,  V.  C,  differing 
from  a  dictum  of  Tindal,  C.  J.,  in  the  previous  case  of  Bevan  v.  Nunn,  9  Bing.  112, 
to  the  effect  that  payment  of  a  debt,  to  a  creditor,  by  way  of  preference,  is  not  an 
act  of  bankruptcy  under  6  Geo.  IV.  c.  16,  s.  3.  This  opinion,  it  appears,  that  the 
chief  justice  still  retained,  at  the  time  of  the  decision  of  Ex  parte  Simpson.  See 
De  G.,  Bank  Rep.  27  ;  and  see  Anon.,  2  Show.  133. 

(c)  See  Ogden  v.  Stone,  11  M.  &  M.  494. 

(d)  Belcher  v.  Jones,  2  M.  &  W.  258. 


[>[  SB  A  ST    OB    THE    LAW    OF    BANKING. 

they  would  probably  have  recovered  the  2,000?.,  which  he  drew  out  in 
P  Mich  information;  but  the  curt  considered  it  to  be 
carrying  the  doctrine  of  fraudulent  preference  too  far.  to  lav  down  that. 
notwithstanding  a  man's  declared  intention  contradicting  any  design  of 
fraudulent  preference,  if,  in  consequence  of  any  act  of  his,  any  other 
;i  obtains  a  preference,  //at  will  render  the  transaction  fraudulent: 
r  ^ -,_ -.  they  considered  that  *no  previous  decisions  warranted  them  in  so 
L  '  J  deciding.  Perhaps,  however,  it  is  to  be  regretted  that  a  new 
trial  was  not  granted  in  that  case,  bo  that  it  might  have  been  seen 
whether  a  second  jury  would  have  been  convinced,  that  a  banker  who 
communicates  to  the  son  qf  a  director  of  a  company,  that  the  bank  is 
about  to  stop,  and  then  tells  the  Father  the  Bame,  really  intends  the 
matter  to  remain  a  secret  from  the  directors,  although  he  may  declare 
he  dee-.  The  case  appears  to  open  the  way  to  indirect  modes  of  effect- 
ing fraudulent  preferences,  by  Beeming  to  pronounce  that  nothing  but  a 
direct  transaction  between  the  bankrupt  and  the  creditor  preferred,  can 
form  such  a  preference. 

It  is  well  known  that  the  legal  aspect  of  a  preference  is  not  altered, 
by  the  fact,  that  the  creditor  preferred  may  have  the  strongest  claims 
upon  the  gratitude  of  the  firm.  Thus,  where  a  person  on  tin-  6th  July, 
to  win 'in  a  bank  already  owed  1,300/.,  paid  in  a  sum  of  7,000/.  to  his 
account,  which  he  had  borrowed  in  order  td  help  them,  telling  them  he 
Bhould  nut  draw  the  money  out  until  the  Friday  following;  then,  at  five 
i  mii  the  morning  of  the  9th,  one  of  the  linn  encloses  two  promis- 
Borynotes,his  own  separate  property,  to  the  amount  of  L7,2022.  18s.  b/., 
to  the  creditor,  and  absconds  to  France,  before  the  letter  reaches  it<  des- 
tination, and  is  made  bankrupt  ;  the  assignees  were  held  entitled  to 
r  the  notes  in  trov<  r,  the  transaction  being  a  manifest  fraudulent 

and  a  void  transaction  for  want  of  the  creditor's  assent. 
and  because  an  act  of  bankruptcy  intervened  before  the  notes  reached 
him.      The  absconding  partner  owed  more,  to  the  linn,  than  the  amount 

of  the    t'.Vo    Hot,-. 

Another  class  of  ca»  a,  very  materially  affecting  the  interests  of  bankers, 
with  reference  to  the  proof  of  debts  under  bankruptcy  proceedings,  ai 
on  the  question,  of  the  banker's  knowledge,  of  an  act  of  bankruptcy, 
previously  committed,  to  his  cashing  a  cheque  of  the  bankrupt. 
,  r>~m  A  bankrupt,  after  an  act  of  bankruptcy,  of  which  the  bankers 
I  J  have  notice,  though  that  is  not  the  act  of  bankruptcy  on  which 
the  Hat  was  founded,  draws,  upon  them,  various  cheques,  in  favour  of 
d  creditor-,  which  cheques  are  cashed  bj  the  bankers;  thej  cannot 
prove  for  the  amounts  Of  them.fY) 

Tie  ■  id  «  notice  of  an  act  of  bankruptcy/'  it  must  be  observed, 

has  been  con-true. 1  to  mean  a  general  notice  of  an  accomplished  act  of 

Barman  v.  Fisher,  Cowp.  1 17. 

i:-.  parte  Sharp,  3  If.  D.  &  D.  490;  Bee  L2  .v  L3  Vict.  c.  106,  b.  166;  Bam- 
.  Burrell,  2  B.  &  P.  1.     Bi  parte  Sharp  BhowB  the  law,  in  thi    ri   pect,  to  be 
different  from  what  had  been  formerly  decided  on  similar  facts.     Ej  parte  Bow- 
I  m.  .v.  Sel.  it:-:  S.  i'..  2  Ro  e,  261     Ex  parte  Birkett,  per  Ld.  Bldon  - 
M.  a  W.  -Ml. 


CHEQUES.  95 

bankruptcy  ;(#)  but  the  act  must  be  complete;  notice  that  something  is 
going  on,  out  of  which  perhaps  an  act  of  bankruptcy  may  result,  is  not 
sufficient ;(Ji\  and  notice  of  an  act  of  bankruptcy  given  to  the  Bank  of 
England,  in  London,  is  notice  to  their  branch  banks,  at  all  events,  from 
the  time,  when  information  of  it  might  be  transmitted  to  the  branches. (?) 
The  time,  here  mentioned,  probably  means,  time  in  the  ordinary  course 
of  post ;  at  least,  before  the  invention  of  electric  telegraphs,  it  has  been 
held,  that  in  cases  of  notice  of  dishonour,  and  similar  cases,  it  was 
enough  to  transmit  the  information  in  course  of  post ;  and  at  present  it 
remains  undecided,  the  question  never  having  arisen  before  the  courts, 
whether  the  bank  would  be  bound  to  send  word  by  telegraph. 

The  case,  first  mentioned,  of  a  trader  drawing  cheques  on  his  bankers, 
after  an  act  of  bankruptcy,  was,  where  his  account  was  overdrawn,  at 
the  time ;  and  it  has  been,  before  mentioned,  that  if  bankers,  knowing 
of  an  act  of  bankruptcy  of  a  customer  having  funds  in  their  hands, 
honour  his  cheques,  they  are  liable  to  the  assignees  of  the  customer,  on 
his  becoming  bankrupt,  for  the  amount  they  have  paid  out  *to  .-  ^q  -, 
such  orders  ;(&)  it  was  even  held  formerly,  though  such  would  L  c  J 
not  probably  be  now  held,  that  bankers  paying  a  customer's  cheques, 
after  an  act  of  bankruptcy  on  his  part,  not  known  to  them,  would  be 
liable,  to  the  assignees,  for  the  amount. (?) 

Bankers  stopping  Payment. — As  to  the  operation  of  a  cheque  drawn 
after  stoppage  of  payment  by  bankers,  where  A.  and  B.,  partners,  had  a 
joint  account  with  bankers ;  A.  had  also  a  separate  account.  On  22nd 
April  the  bankers  announce  a  suspension  of  payment,  and  that  they 
could  not  answer  any  more  cheques.  At  that  time  A.  and  B.  were  in- 
debted, on  the  joint  account,  333?.  to  the  bank,  but  the  bank  was 
indebted  to  A.,  on  his  separate  account,  478?.  After  this  no  cash  pay- 
ments were  made  by  the  bank.  On  25th  May,  A.  assigns  the  balance  of 
478?.,  due  to  him,  to  the  joint  account  of  A.  and  B.,  and  gives  a  written 
notice  to  the  bankers  of  such  assignment,  and  A.  and  B.  jointly  require 
the  bankers  to  place  such  balance  to  their  joint  account.  This  was  not 
complied  with.  On  the  30th  May  an  act  of  bankruptcy  was  committed 
by  the  bankers,  on  which  the  fiat  issued  on  the  31st.  A  court  of  chancery 
considered  A.  and  B.  to  have  no  right  to  set  off  the  two  debts,  their  con- 
duct showing,  that  though  they  knew  they  could  not  obtain  payment  of 
a  cheque,  they  had  attempted  to  have  the  full  benefit  of  a  cheque. (m) 

Perhaps,  however,  the  transfer  of  a  cheque  drawn,  not  by  but  in  favour 
of.  the  trader,  into  the  possession  of  a  creditor,  might  come  under  a 
different  construction,  for  a  cheque,  as  we  have  seen  before, (n)  is  a  chose 
in  action  ;  and  it  has  been  held,  on  the  highest  authority,  that  the 
words  »  goods  and  chattels"  will  not  pass  a  chose  in  action,  when  used 


{g)  Udall  v.  Walton,  14  M.  &  W.  254. 

(A)  Conway  v.  Nail,  1  C.  B.  643 ;  explained  14  M.  &  W.  258,  259. 

\i)  Willis  v.  Bank  of  England,  4  A.  &  E.  21. 

\k)  See  Supra,  pp.  66,  67.     Vernon  v.  Hankey,  2  T.  R.  113. 

\l)  Hammersley  v.  Purling,  3  Ves.  757. 

(m)  Watts  v.  Christie,  11  Beav.  546. 

(n)  Moore  v.  Barthrup,  2  Dowl.  &  R.  25. 

January,  1857. — 8 


<.KANT    <»N    Til  E    1..W,     01     BANKING 

._  in  *a  will ;  and  as  a  will  i>  to  have  a  libera]  construction,  to 

-I  earn-  into  effect  the  intention  of  the  testator,  and  the  bankrupt 

:    Dal  in  their  operation,  and  therefore  to  be  construed  Btrictly, 

ms,  &  fortiori}  that  those  words,  when  found  there,  cannot  be  taken 

i  i  extend  to  cheques  of  this  kind  , 

So,     has  lx  en  solemnly  decided  that,  Btock  and  money  in  the  funds 
•  pass  under  the  wc.rd-  bona  el  cataUa  felonumJp)  nor  has  the 
grantee  the  debts  due  to  the  felons,($)  and  consequently  not  cheques, 
which  are  orders  for  the  payment  of  debts  ;  hut  the  grantee,  under  such 
•.  ! .:.-  been  held  to  take  the  ready  money  of  the  felon.fr) 
Cheques  as  Money. — By  the  oaageol  trade  cheques  have  been,  in  some 
considered  as  money.     For  instance,  by  the  usage  of  banking,  if  a 
hill  was  sent  up.  to  a  London  banker,  from  a  country  correspondent,  to 
ated  for  payment,  the  London  hanker  was  thought  to  be  justified 
cheque  in  payment  for  it.  though  the  cheque  be  dishon- 
oured, atur  he  has  given  up  the  bill  ;(*)  but  it  may  be  doubted  whether 
this  usage  would  be  considered,  at  the  present  day,  to  be  a  reasonable 
us  .  .  30  as  to  protect  the  London  banker. 
Another  ease  in  which  a  cheque  has  been  regarded  as  payment  is  the 
wing.     A  cheque  given  for  stock  sold  is  lost  hy  the  vendor  in  truing 
hi  me :  the  purchaser  is  immediately  apprised  of  this,  hut  refuses  to  pay 
tl.i  price  of  the  stock  without  an  indi  mnity.     Four  months  after  this  the 
,     ,  .  -.  bankers  on  whom  the  cheque  was  drawn  fail,  with  sufficient 
J     nmiiey  of  the  drawer's  in  their  hands  to  cover  it.     Held  that, 
t  these  circumstances,  an  action  would  nut  lie  hy  the  vendor  fur  the 
price.  (<) 

li  a  cheque  ha-  been  given  as  the  consideration  <d  an  annuity,  it  might, 

formerly,  be  Btatedas  money,  provided  the  cash  lor  it  bad  been  received, 

h\  thi-  grantor,  previous  to  the  execution  of  the  deed;(u)  hut,  if  not 

•  ■I  previously,  the  cheque  must  have  been  Bet  forth.(x) 

Cheques  belonging  to  a  person,  against  whose  effects  any  writ  of  fieri 

facias  ma\  have  been  Bued  out  of  anj  superior  or  inferior  court,  may  now 

and  must  he  seized  bj  tin  Bheriff,  hy  virtue  of  1  &  2  Vict.  e.  110,  b.  12, 

hut  the  Btatute  makes  a  distinction  between  cheques,  ami  money  or  hank 

•h  ot  which  it  empowers  ami  orders  the  Bheriff  to  Beise,)  in  this 

-  that  monej  and  bank  notes  shall  be  given  up  to  the 

judgmenl  creditor,  hut  the  sheriff  is  to  hold  cheques,  &c.,  as  a  security, 

lor  the  Mini  direct)  d  bj  the  wril  to  he  levied,  ami  is  enabled  kosue  upon 

them,  ami  the  payment  hy  the  part]  liable  on  Buch  cheque,  with  or 

C     pman  v.  Hart,  1  V(  "         \.  Moore,]   Bro.  C  C.  127;  Bee 

-    •  ..I..,,.  L2  Rep.  1. 

Wildman  v.  Wildman,  9  v.  .117. 
~     ton  :    R.  276;    -•  •  Com.  D  O.j  Vin.  Abr.  Prerog. 

I..  .  .  pL  1. 
on.,  2  Show.  133  j   l  Win-.  Bannd.  275,  i  Vin.  Abr.  450:  Anon., 

j  Hawk.  P.  r. 
Russell  v.  Hankey,  6  T.  R.  12 ;  Ridley  v.  Blackett,  Peak  Cas.  62. 

(i    Bevan  v.  Hill,  2  Campb  381.  Ex  parte  Michel],  2  East,  li 

ii  irris,  ■)  T.  R,  ;:•;.  and  dow 
•  bed. 


CHEQUE  s.  97 

without  suit,  or  the  recovery  and  levying  execution  against  the  party  so 
liable,  is  to  discharge  such  party  from  his  liability  on  the  cheque,  and 
then  the  sheriff  is  to  pay  over  the  money,  so  recovered,  to  the  judgment 
creditor,  &c,  provided  that  no  sheriff  shall  be  bound  to  sue  upon  such 
cheque,  unless  the  judgment  creditor  shall  enter  into  an  indemnity  bond 
with  two  sureties,  &c.  This  enactment  has  been  amended,  and  the 
powers  given  by  it  somewhat  enlarged,  by  3  &  4  Vict.  c.  82,  s.  1. 

The  following  decisions,  under  the  combined  operation  of  these  statutes 
may  be  usefully  brought  to  the  reader's  attention. 

A  judgment  creditor,  finding  that  a  sum  of  money  was  about  to  be 
paid  out,  in  a  cause  in  Chancery,  to  his  debtor,  ^applied  to  the  r  ,,.„„  -, 
court  to  order  that  the  sheriff  might  be  at  liberty  to  seize,  in  the  L  L  J  J 
hands  of  the  accountant-general  in  Chancery,  a  cheque  by  means  of 
which  the  sum  was  to  be  paid  out ;  it  was  held  that  the  cheque  was 
liable,  by  virtue  of  the  above  statute,  to  seizure ;  it  was  also  held  that, 
inasmuch  as  the  cheque  was  in  the  hands  of  the  accountant-general  of 
the  court,  the  application  was  proper;^)  that  is,  that  it  would  not  have 
been  proper,  for  the  sheriff,  to  seize,  without  being  authorized  by  an 
order  of  the  court. 

In  another  case,  subsequent  to  this,  it  was  said  that  a  cheque  of  the 
accountant-general  in  favour  of  A.,  but  not  delivered  out,  is  not  A.'s 
property,  so  as  to  be  liable  to  seizure ;  and  leave  to  seize  was  refused, 
the  case  being,  it  was  said,  distinguishable  from  the  last-mentioned  case, 
by  the  circumstance  that  the  cheque  had  been  delivered  out,  by  the 
accountant-general,  in  the  former  case,  which  was  not  so  in  the  latter ; 
a  stop  order  was  accordingly  granted,  restraining  the  accountant-gene- 
ral, from  parting  with  the  cheque,  out  of  his  possession. (z)  It  may  be 
observed,  with  respect  to  the  distinction  taken  between  the  two  cases, 
that,  in  the  first  case,  the  cheque  had  been  delivered  out,  but  had  been 
replaced  in  the  accountant-general's  hands,  so  that,  the  property  in  it 
having  passed  to  the  creditor,  the  accountant-general  held  it  as  agent 
for  the  creditor,  and  the  possession  of  the  agent  being  the  possession  of 
the  principal,  it  might  be  seized,  in  the  hands  of  the  one,  on  the  same 
grounds,  that  it  might  be  seized,  in  the  hands  of  the  other. 

A  cheque  may  have  been  treated,  throughout  a  transaction  as  money, 
by  all  the  parties,  in  which  case  none  of  them  can  turn  round  and  insist 
upon  any  right  that  he  might  have  derived,  out  of  the  cheque,  considered 
as  an  order  for  the  payment  of  money.  Thus,  if,  in  such  circumstances, 
a  cheque  were  deposited,  with  a  person,  to  abide  a  certain  event,  r  ^qo  -i 
it  *would  be  no  breach  of  the  stakeholder's  duty,  to  get  the  >-  -■ 
cheque  cashed,  before  the  occurrence  of  the  event.  (a\ 

Where  there  has  been  any  fraud,  on  the  party  giving  the  cheque,  then, 
although  the  creditor,  at  the  time,  took  the  cheque  as  payment,  it  will 
not  be  considered  as  money ;  thus,  if  A.  gives  B.,  in  payment  for  goods, 

{y)  Watts  v.  Jefferies,  3  Mac.  &  G.  422. 

(z)  Courtoy  v.  Vincent,  15  Beav.  486. 

(a)  Wilkinson  v.  Godefroy,  9  A.  &  E.  536.  Semble,  keeping  the  cheque  until  a 
reasonable  time  for  presenting  and  getting  cask  for  it  has  elapsed,  is  evidence  that 
the  holder  so  treats  it.     Bishop  v.  Chitty.  Stra.  1195. 


\  N  I     1 1  X      1  II  I     1.  A  W     1 1  P    1!  A  M  K  INh. 

i  cheque  which  A.  has  do  reasonable  ground  bo  expect  will  be  paid,  no 
rty  in  the  goods  paaaee  to  A..(6),  and  ]>.  may  sue  iu  trover,  or  he 
m:tv  affirm  the  contract,  and  rae  for  the  price  of  the  goods. (i) 

A  oheque  drawn  by  A.,  in  favour  of  15.  as  a  gift,  cannot,  according 
bo  tin-  general  principle  that  there  must  be  a  consideration  for  an  under- 
taking aot  under  seal,  be  enforced  by  B.  in  an  action  against  A.  Nor 
•  •:in  a  cheque  be  bhe  subject  of  a  donatio  mortis  causd,  at  least  unless 
the  ]  '  ;t  cashed,  before  the  drawer's  death,  or  after  his  death, 

but  before  tin-  banker  has  ootice  of  the  death. (c)  Negotiable  instruments, 
which  are  commonly  treated  as  money,  may  constitute,  as  money  may,  a 
donatio  mo,-//*  causd,  hut  cheques,  not  being  so  treated,  cannot  be 
so  considered  in  bhis  reap  « t  ;  moreover,  a  cheque  being  a  mere  chose  in 
actionf  cannot  he  a  ih,n<iti<,  mortis  causd  fur  that  reason. (</)  It  is  to  be 
red  also,  a-  essential  to  the  validity  of  a  <l<>n<it<<,  mortis  causd,  that 
tin-  money,  or  the  subject  of  the  gift  shall  be  actually  handed  over,  at 
the  time,  at  which  the  alleged  donation  is  stated  to  have  been  made  ;M 
but  a  cheque  is  not  money,  nor  is  the  piece  of  paper  the  subject  of 
r*  <U  1  *^1C  "l^>  so  tnat'  m  eitber  view,  a  cheque  fails  to  conform  to 
L    '     J  this  requirement  of  a  good  donatio  mortis  causd.lf\ 

When  a  cheque  is  handed  to  a  person,  on  a  condition,  and  the  money 
t  by  him,  for  the  cheque,  but  the  condition  is  not  performed,  the 
.  may  be  recovered  back  by  the  drawer. (o\ 

A  banker  has  no  right  to  debit  the  customer,  who  draws  the  cheque, 
from  the  date  at  which  it  is  drawn;  he  is  bound  to  make  the  entry,  as  of 
tin'  date,  when  the  cheque  was  cashed. (A) 

When  a  cheque  is  dishonoured  and  bhe  payee  sues  the  drawer  upon  it, 
and  recovers,  the  cheque  may  he,  it  appears,  referred  to  bhe  master  t. 
compute  principal  and  interest  due,(i)  as  may  be  done  in  case  of  a  bill 
of  exchange  or  note;  but,  as  in  the  case  of  such  instruments,  probably  it 
would  be  Indispensable,  for  that  purpose,  that  the  cheque  should  be  pro- 

dnoed  at  the  trial. (/•) 

Cheques  <n-  not  Bills. — Cheques,  it  ha-  be<  d  Baid,  are  nearly  on  the 
-am.-  footing  as  hills  of  exchange,  but  there  i-  much  vagueness  in  this 
Statement  ;  and  the  points  of  difference  seem  to  he  more  numerous  than 
'he  points  of  resemblance.  Cheques  are  not  accepted  ;  bhey  pass  by  de- 
livery without  indorsement  :  they  are  not  within  the  custom  of  merchants 
with  respect  to  bills  of  exchange  ;  they  are  not  governed  by  bhe  custom 

of  merchant-  or  the  law  merchant,  as  adopted  into  the  law    of    England, 

(b)  i:  -t  M .   Ill:  Noble  v.  Adam-.  T  Taunt.  59  :  Karl  of  Bris- 

tol v.  Wilsmore,  l  I:,  .v  0.  5]  i. 

Tab  .J.  Ill;  Reddell  v.  D  ir.  :i'i;  10  Sim.  241. 

id)   Miller  v.  .Miller.  ::  I*.  \\  • -..n  v.  Lawson,  1   1'.  Win.-.   111. 

(e)  Thompson  v.  Befferman,  i  I'm.  ,\.   v.  Lunn  \.  Thornton,  1  C.  B. 

381.  n. 

Stnbbs,  i  Bare 
Wicnlmlt  v.  Spitta,  3  Cam]  2  M.  &  Qra.  295. 

l/,i  Goodbody  per  Ld.  Lyndhm  tnbr.  Snm.  Ass.  1831,  < 

Bylee  on  Bills,  18, 

Bentbam  v.  Ld.  Chesterfield,  5  Bcott,  117. 
(A:)  Ilutton  v.  Ward,  15  Q.  B.  J 


•      CHEQUES.  99 

but  by  the  common  and  statute  law  of  the  laud.  The  courts,  on  various 
occasions,  have  pointed  out  differences  and  discrepancies  between  the 
rules  and  principles  applicable  to  cheques,  and  those  applicable  -y.  Qr  -. 
*to  bills  of  exchange.  Thus,  it  has  been  observed,  that  no  days  L  l  J 
of  grace  are  allowed  with  respect  to  cheques,  which  are  always  to  be 
cashed  speedily,  if  not  immediately  ;(Z)  also,  as  has  been  stated  already, 
the  owner  of  a  cheque  does  not  obtain,  on  a  cheque,  any. move  time,  .for 
presentment  by  employing  a  banker  to  make  ?t,  while  \n  -the'case.  of  5a 
bill  of  exchange,  by  the  custom  of  merchants, '  the  holder  obtains  a 
day  more,  for  giving  notice  of  dishonour,,  by  presenting  it  through  a 
banker,  than  if  he  presented  the  b.iil  .himself ; (m)  also,  the  fieatfvjof  the 
drawer  of  a  cheque  rescinds  the  banker's  authority  to  •pay*  it';  the  death 
of  the  drawer  of  a  bill  of  exchange  has  no  operation,  10  .diminish  or  alter, 
the  nature  of  the  responsibilitieg  of  the  other  parties -to  it.(w) 

Again,  where  the  indorsee  of  ;a  bill  oji  exchange  sues  the  acceptor  of 
a  bill,  accepted  payable  at  a  banker's,  it  is  not  necessary,  to  enable  him 
to  recover,  that  he  should  prove  that  the  acceptor  has  had  notice  of  the 
non-payment  at  the  banker's;  but  in  the  case  of  a  cheque,  if  the  payee 
sues  the  drawer,  it  is  necessary  to  give  notice  to  the  drawer,  of  the  non- 
payment, at  the  banker's. (o)  An  instrument,  calling  on  A.  to  pay  so 
many  pounds,  on  account  of  B.,  to  C,  and  accepted  by  A.  and  indorsed 
to  D.,  payable  at  E.'s  bank,  differs  from  a  cheque,  and  cannot  be  sued 
on  as  such ;  it  is  a  bill  of  exchange  (_p)  We  have  seen,  when  discussing 
the  subject  of  the  London  Clearing  House  used  by  bankers,  how  cheques, 
presented  at  the  banking  house,  too  late  for  payment  *to-day,  r  ^Q„  -. 
are  marked  for  payment  at  the  Clearing  House,  to-morrow,  such  L  *  -I 
marking  having  the  effect  of  an  acceptance  by  the  usage ;  but  no  usage 
can  countervail  the  effect  of  an  Act  of  Parliament ;  and  by  statute, 
acceptance  of  all  inland  bills  of  exchange  must  be  in  writing.  Now  a 
mere  mark,  unaccompanied  by  any  words  signifying  recognition  or  accept- 
ance of  the  order,  could  not  be  looked  on  as  a  compliance  with  the  enact- 
ment ;  and  in  this  respect,  therefore,  cheques  differ  from  bills.  The 
Statutes  of  Limitations  run  against  the  contractor's  liability,  in  all 
casesfy)  of  bills  of  exchange,  from  maturity ;  it  does  not  appear  to  be 
considered  that  the  drawer  of  a  cheque  would  be  justified,  by  the  mere 
circumstance  of  the  payee's  refraining  from  presenting  it,  for  any  num- 
ber of  years,  in  ordering  his  banker  to  refuse  payment  when  it  should  be 
presented,  (r) 

(I)  Smith  v.  Ferrand,  7  B.  &  C.  19;  see  Grant  v.  Vaughan,  3  Burr.  1517.  As 
to  days  of  grace,  Moyser  v.  Whitall,  9  B.  &  C.  409 ;  Sutton  v.  Toomer,  7  B.  &  C. 
416.  It  was  not  until  upwards  of  eighty  years  had  elapsed  after  the  date  of  3  & 
4  Anne,  c.  9,  puttiug  promissory  notes  on  the  same  footing  as  bills  of  exchange, 
that  the  courts,  after  some  oscillation,  finally  decided  days  of  grace  to  be  allowa- 
ble, on  promissory  notes,  as  well  as  on  bills  of  exchange.  Brown  v.  Harraden,  4 
T.  R.  148,  a.  d.  1791.  (m)  Alexander  v.  Burchfield,  7  M.  &  Gra.  1060. 

(n)  Billing  v.  Devaux,  3  M.  &  Gra.  571,  572,  573. 

(o)  Treacher  v.  Hinton,  4  B.  &  Ad.  413  ;  see  Walwyn  v.  St.  Quintin,  1  B.  &  P. 
652.  (p)  Treacher  v.  Hinton,  4  B.  &  Ad.  413. 

(q)  See  several  points  of  difference  pointed  out  by  Tindal,  C.  J.,  and  Maule,  J., 
Warwick  v.  Rogers,  5  M.  &  Gra.  363. 

(r)  See  diet,  per  Patteson,  J.,  Robinson  v.  Hawkesworth,  9  Q.  B.  56. 


100  QBANT    OB    THE    LAW    OF    BANKING. 

A  bill  of  exohange  [being  an  inland  bill,)  payable  on  demand,  must 
have  it<  appropriate  stamp  to  be  valid;  a  oheqne  (the  requirements  of 
the  statutes  being  observed)  i<  exempt.  (*) 

At  law,  there  are  many  easi  i  which  establish,  that  no  action  fur  money 

ha<l  and  received  will  lie.  against  a  banker,  in  respect  of  funds,  which 

baa  ordered  him  t>>  pay,  to  any  person,  at  the  suit  of  the 

person,  ji,  vihose  favour  the  order  is  made,  onless  the  banker  lias  assented 

nii.iiui'u-ated  his  consent  to  tin-  plaintiff  ;(<)  in  equity, 

.  in  cider  upon  .win'_'  money,  or  holding  funds  belong- 

.  •- 1  the  drawer,  operates  aq  an  equitable  assignment  of  such  debt  or 

raoney,(u)  jHtid  the  assignee  mi:_h,\  it  seems,  in  equity,  j>roceed  against 

r.     The  law  merchant  does  this  with  respect  to  bills 

'         J  of  exchange*. 

\  cheque  i-  not  doe'  before  payment  te  demanded,  and  in  this  respect 
differs  from  all  such  lull.-  itf-ex^hange  .1-  are  payable  on  :i  fixed  day.(x) 
In  one  respect,  there  appeana  to-  be  no  difference  between  a  bill  of 
exchange  and  a  cheque,  a-  regards  pleading  :  namely,  that  in  an  action 
by  indorsee  against  drawer  of  the  one,  or  by  payee  against  drawer  of  the 
other,  defendant  may  equally  allege,  as  a  -round  why  non-payment  has 
not  been  notified,  to  the  drawer,  before  action,  that  the  plaintiff  has 
sustained  no  damage  by  reason  of  such  want  of  notice.)//) 

S   imp*  on  Cheques. — By  31  Geo.  3,  c.  25,  s.  10,  no  bill  of  exchange, 

promissory  note,  or  other  note,  draft,  or  order,  nor  any  receipt,  discharge, 

acquittanoe,    note,  memorandum,  or   writing  aforesaid,    liable   to   the 

duties  by  this  act  imposed,  or  any  of  them,  shall  be  pleaded  or  given  in 

aoe  in  any  court,  or  admitted  in  any  court  to  be  good,  useful,  or 

available  in  law  or  equity,  unless  the  vellum,  parchment,  or  paper,  on 

which  such  bill  of  exohange,  promissory  note,  or  other  note,  draft,  or 

order,  receipt,  discharge,  acquittance,  note,  memorandum,  or  writing,  as 

-  iid.  shall  be  engrossed,  printed,  written,  or  made,  shaU  be  stamped 

or  marked  with  a  lawful  stamp  or  mark,  to  denote  the  rate  or  duty  as  by 

this  ait  is  directed,  or  some  higher  rate  or  duty  in  this  act  contained; 

and  it  -hall   nut  1,.'  lawful  fur  the  said  commissioners  or  their  officers,  to 

-tamp  or  mark  any  vellum,  parchment,  or  paper,  with  any  stamp  or  mark 

directed  to  be  used  or  provided  by  virtue  of  this  act,  at  any  time  after 

any  bill  of  exchange,  promissory  note,  or  other  note,  draft,  or  order,  or 

■  ipt,  discharge, or  acquittance,  *except  as  herein  is  other- 

J  wise  provided,  shall  be  engrossed,  written,  or  printed  thereon, 

under  any  pretence  whatever;  anything  in  this  act  contained,  or  any 

law  or  statute  to  the  contrary  thereof  notwithstanding. 

''hi  set  appear  to  be  interfered  with,  by  the  pro- 

ed. ;  17  A  18  Vict.  c.  83.  SB.  7,  8,  9,  10  :  see  to- 
ll.  .V.   Gra.  .".71  :    Wharton  v.  Walker,  4  B.  &  C.  163; 

i:       ;.  *.  Q  De  <;.  If.  I  I 

1  ■  •'••  ■'•  ■-  I  ■■'  '  ■  8t<  rling,  7  T.  R.  430  ;  Alexander  v.  Burch- 

:|>ra. 

I 'owl.  4  L.  28;  Eemble  r.  Mills,  1  M    k  Gra  757-  S 


CHEQUES.  101 

visions  of  the  late  statute  16  &  17  Vict.  c.  59,  repealing  certain  stamp 
duties,  &c,  and  amending  the  laws  relating  to  stamp  duties. 

The  55  Geo.  III.  c.  184,  s.  8,  refers  to  the  former  statute  of  Geo. 
TIL,  and  incorporates  these  provisions.^) 

Hence  it  would  almost  appear,  that,  as  the  above  enactment  makes 
cheques  unstamped  to  be  invalid,  the  payee  of  a  cheque,  like  the  payee 
of  a  bill,  which  is  unstamped,  cannot  recover  upon  it,  and  it  seems  also 
as  though  the  case  were  not  within  the  Common  Law  Procedure  Act, 
1854,  which  makes  provision  for  the  stamping  at  the  trial  of  unstamped 
documents  produced  in  evidence, (a)  because  the  stamp  acts  appear  to 
make  void  all  such  cheques,  &c,  as  have  not  the  proper  stamp  affixed 
to  them,  before  anything  be  written  or  printed,  on  the  paper  intended 
for  the  cheque.  In  other  words,  cheques,  which,  from  the  circumstances 
in  which  they  are  drawn, (?>)  require  stamps  to  give  them  validity,  cannot 
be  made  available,  in  evidence,  by  complying  with  the  requirements  of 
the  Common  Law  Procedure  Act,  1854. 

A  late  statute  introduced  some  alterations,  with  respect  to  stamps  on 
drafts  or  orders  on  bankers,  in  cases  where  they  were  already  required 
to  be  stamped :  for,  retaining  the  exemption  from  stamp  duty  of  all 
drafts  or  orders  on  bankers  for  the  payment  of  money  to  the  bearer  on 
demand,  it  imposed  a  stamp  duty  of  one  penny  on  all  drafts  or  orders 
payable  to  order  on  demand,  and  on  letters  of  credit,  permitting  such 
duties  to  be  denoted,  either  by  stamp  impressed  *on  the  paper,  pgg-i 
or  by  an  adhesive  stamp,  and  directing  the  person  signing,  or  L  "  J 
making,  the  draft  or  order,  to  cancel  or  obliterate  such  adhesive  stamp, 
by  writing  thereon  his  name  or  the  initial  letters  of  his  name,  under  a 
penalty  of  10/. (c) 

Another  statute,  reciting  the  law  to  be  that  "  certain  drafts  or  orders 
for  the  payment  of  any  sum  of  money  to  the  bearer  on  demand,  drawn 
upon  any  banker  or  person  acting  as  a  banker,  residing  or  transacting 
the  business  of  a  banker,  within  fifteen  miles  of  the  place,  where  such 
drafts  or  orders  are  issued,  are  exempted  from  all  stamp  duty,"  to  pre- 
vent the  negotiating  or  circulating  these  drafts,  &c.  beyond  the  fifteen 
miles,  prohibits,  under  penalty  of  50?.,  such  draft  or  order  being  sent  to 
any  place  beyond  that  distance,  "in  a  direct  line  from" ((7)  the  bank  or 
place,  at  which  the  same  is  made  payable  :  or  being  received,  in  payment, 
or  as  a  security,  or  being  otherwise  negotiated  or  circulated,  at  any  place, 
beyond  the  said  distance. (e)  There  is  nothing,  however,  to  prevent  any 
one,  who  may  receive  such  draft  or  order,  at  any  place,  within  the 
fifteen  miles,  which  has  been  lawfully  issued  without  a  stamp,  from 
affixing  an  adhesive  stamp  and  cancelling  it,  as  before,  so  as  to  remit  or 
send  the  draft  or  order  beyond  the  distance,  &c. ;  in  which  case  it  may 

(z)  Field  v.  Woods,  10  B.  &  C.  114 ;  Smart  v.  Nokes,  7  Scott,  N.  R.  794. 

(a)  17  &  18  Vict.  c.  125,  s.  28. 

(b)  See  Bradley  v.  Bardsley,  14  M.  &  W.  876. 

(c)  16  &  17  Vict.  c.  59,  ss.  3,  4,  and  sched. 

(d)  I.  e.,  measured  along  a  horizontal  plane.     Stokes  v.  Grissell,  23  L.  J..  C.  B. 
141 ;  see  Grant  on  Corporations,  388,  389,  n.  (/). 

(e)  17  &  18  Vict.  c.  83,  ss.  7,  8. 


ol.A.Nl     OK     Tlii:     LAW     OF    BAN  KIN'. 

■  1  and  negotiated  beyond  the  distance,  notwithstanding  the 

.  naetiiiciit-.('  ) 

.1-  rime*  <m<l  >>//'■  nc<  i  in  relation  to  cheques,  it  is  an  offence 

under  the  statute  7  a  v  Geo.  IV-  <•.  29,  b.  53,  [though  perhaps  not  at 

ion  law,  unless,  at  any  rate,  the  defendant  be  charged  with  using 

-.  &c.  in  order  to  accomplish  the  deceit^/")]  for  a  person  to 

what  purports  to  be  his  cheque  upon  hie  banker,  in  payment  for 

when  in  truth  he  has  no  account  with  the  banker  *nainedj 

-I  this  is  a  false  pretence  under  that  statute. (y)     So,  where  the 

barged  with  falsely  pretending  that  a  post-dated  cheque, 

drawn  by  himself,  was  a  good  and  genuine  order  for  l'.V.,  and  of  the 

value  of  25?.,  whereby  he  obtained  a  watch  and  chain,  and  the  jury  found 

•  th<-  completion  of  the  transaction — of  the  Bale  and  delivery 

of  tin-  watch  and  chain,  by  the  prosecutor,  to  the  prisoner — he  repre- 

i.  t"  the  prosecutor,  that  he  had  an  account  with  the  bankers  on 

whom  the  cheque  was  drawn,  and  that  In-  had  a  right  to  draw  the  cheque, 

_h  he  postponed  the  date  fur  his  own  convenience,  all  which  was 

.uid  that  he  represented  that  the  cheque  would  be  paid,  on  or  after 
•  the  date,  hut  he  had  in  reality  no  funds  to  pay  it,  the  prisoner 
wa-  held  to  be  properly  convicted. (Zi) 

A  cheque  was  made   payable  to  D.  Francis  Jones  fnot  saying  "  to 

order,"  nor  adding  the  words  "or  to  bearer"]  by  a  person  living  in 

and  enclosed  in  a  letter  directed  to  Kennington,  Surrey. 

A  person  was  indicted  under  7  &  8  Geo.  IV.  c.  29,  s.  5,  which  makes 

it  a  felony  --i"  steal  (amongst  other  things)  any  order,  or  other  security 

whatsoever,   for   money,   or   of  payment   of  money,"   for  larceny   of  the 

above-mentioned  instrument,  which  turned  out  to  be  on   unstamped 

-    contended,    on    hi-   behalf,    that    this    instrument,  being 

le  to  D,   Francis  Jones  alone,  was  not  of  any  value  to  the  prisoner, 

uay  other  person  than  I».  Francis  Jones,  and  was  not  an  available 

it)  ;  the  judges  held  that  tlii-  cheque,  having  been  drawn,  at  Brecon, 

upon   Messrs.  Childs'  bank  in  London,  without  a  stamp,  was  not  a  valua- 

curity,  within  the  above  enactment,  because  it  would  be  a  breach 

I  lw  for  the  bankers  to  pay  it.( C\ 

<  )n  the  indietmenl  of  a  person,  for  uttering  a  forged  cheque,  it  is  not 

.    ,     necessary  to  call  the  supposed  maker  to  disprove  an  ^authority 

1  I  from  him  to  an)  other  person  to  sign  in  his  name;  it  is  sufficient 

jprove  tie-  handwriting.  (&) 

In  ■_-■  neral   a  cheque   may  1m-   described   as   a  valuable  security  of  the 

value  of,  A.'.,  without  mentioning  the  name  of  the  banker  on  whom  it  is 

drawn 
The  defendant,  a  stock  broker,  received  from  the  prosecutor  a  cheque 

(/)  R.  v.  Lara,  C  T.  R.  565 
I:   \   .1.1. 1 

H   \.  Parker,  2  M  Cri.  k  If.  298. 

R    |    v   •■  -    |   v  To. 

v.  Hurley,  '.'  H.  I  What  not  larcem-  of  a  cheque,  Reg.   v 

:   I..  .1.  iN.  E      " 
I.,  j  i    Beat*,  ■-'  Mood  I    I 


CHEQUES.  103 

upon  liis  banker,  to  purchase  exchequer  bills  for  hiui ;  the  defendant 
cashed  the  cheque  and  absconded  with  the  money.  Upon  an  indictment 
for  stealing  the  cheque  and  the  proceeds  of  it,  it  was  holden  to  be  no 
larceny,  although  the  jury  found,  that  before  he  received  the  cheque, 
the  defendant  had  formed  the  intention  of  converting  the  money  to  his 
own  use ;  not  of  the  cheque,  because  the  defendant  had  used  no  fraud 
or  contrivance  to  induce  the  prosecutor  to  give  it  to  him ;  and  because, 
being  the  prosecutor's  own  cheque,  and  of  no  value  in  his  hands,  it  could 
not  be  called  his  goods  and  chattels ;  nor  of  the  proceeds  of  the  cheque, 
because  the  prosecutor  never  had  possession  of  them,  except  by  the  hands 
of  the  defendant,  (m) 

But  where  the  prosecutors  gave  to  the  defendant,  who  was  occasionally 
employed  as  their  clerk,  a  cheque  payable  to  a  creditor,  to  be  delivered 
by  him  to  the  creditor,  and  the  defendant  appropriated  it  to  his  own  use, 
this  was  holden  by  the  judges  to  be  a  larceny  of  the  cheque. (n) 

A  person  may  be  indicted  for  forging  a  cheque  as  "  an  order  for  the 
payment  of  money"  under  11  Geo.  IV.  &  1  Will.  IV.  c.  66,  s.  4.  If 
the  charge,  in  the  indictment,  be  for  forging  a  warrant  or  order,  proof 
of  a  document  which  is  a  warrant  but  not  an  order  for  the  payment  of 
money,  will  not  support  the  indictment,  according  to  one  ruling ;  but 
another  case  has  been  decided  to  the  contrary,  (o) 

*A  cheque  on  a  banker  (although  it  be  post  dated, (p))  is  a  r*i  n^-i 
warrant  and  order,  for  the  payment  of  money,  within  the  above-  L  ""J 
mentioned  statute,  (c/) 

Where  an  instrument,  is  in  any  respect,  incomplete,  and  therefore  not 
operative,  as  where  the  practice  was,  for  a  majority  of  the  officers  of  a 
parish,  to  draw  cheques  on  the  treasurer  of  a  union ;  and  one  of  their 
blank  cheques,  filled  up  for  £1 :  3s.  6c?.,  had  a  note  at  the  bottom, — 
"  Unless  this  cheque  is  signed  by  a  majority  of  the  parish  officers,  it  will 
not  be  cashed."  This  cheque  was  signed,  by  one  of  the  officers  while  it 
was  for  £1 :  3s.  6c7. ;  it  was  then  altered  to  £3  :  3s.  6c?.,  and  when  cashed, 
by  the  treasurer,  had  the  signatures  of  a  majority  of  the  officers  to  it :  it 
was  held,  that  if  the  cheque  was  fraudulently  altered,  when  it  had  only 
one  signature  to  it,  this  was  no  forgery,  (r) 

A  cheque  on  a  banker,  in  a  fictitious  name,  or  in  the  name  of  a  person 
who  never  kept  cash,  with  the  banker,  is  a  warrant  or  order,  within  the 
meaning  of  the  act,  for  it  imports,  upon  the  face  of  it,  to  be  an  order,  by 


(m)  R.  V.  Walsh,  R.  &  R.  215. 

(«,)   1  Mood.  Grim.  C.  433,  R.  v.  Metcalfe  ;  Reg.  v.  Heath,  2  id.  33. 

(o)  Compare  Reg.  v.  Williams,  2  Car.  &  K.  51,  with  Reg.  v.  Williams,  2  Den.  C. 
C.  61.  Filling  a  form  of  cheque,  already  signed,  with  blanks  left  in  it  for  the  sum, 
&c,  is  forgery.     Flower  v.  Shaw,  2  Car.  &  K.  7 03. 

(p)  Reg.  v.  Taylor,  1  Car.  &  K.  213 

(q)  R.  v.  Willoughby,  2  East,  P.  C.  944 ;  R.  v.  Shepherd,  id.  What  not  proper 
averment  and  description  of  an  order  for  the  payment  of  money,  R.  v.  Ravenscroft, 
R.  &  R.  161 ;  Reg.  v.  Curry,  2  Mood.  C.  C.  218  ;  see  Reg.  v.  Turborville,  4  Cox, 
Crim.  Cas.  13.  A.  draws  a  bill  on  B.,  on  whom  he  has  no  right  to  draw,  in  order 
to  induce  bankers  to  honour  his  cheque,  which  they  do :  A.  held  not  guilty  of 
cheating  them.     R.  v.  Wavell,  1  Mood.  C.  C.  224. 

(r)  Reg.  v.  Turpin,  2  C.  &  K.  820. 


104  <;raxt    OR    TUT.    LAW    OF    BANKING. 

•i  person  having  authority  to  make  it.(s)  So,  a  draft  forged  in  the  name 
of  a  person  who  does  keep  sash  with  the  banker,  ie  an  order  within  the 
net,  whatever  be  the  Btate  of  h\<  account  at  the  time.(<) 

Will. — A  oheqne  may  be  admitted  to  probate,  as  a  paper,  of  a  testa- 
mentary character./!*) 

r+1      ,  collation  of  a  cheqyu  is  imperative  on  the  banker,  upon 

L  'J  payment  thereof;  and  any  banker,  who  shall  refuse  or  neglect  to 
oanoel  the  same,  is  made  liable  to  a  penalty  of  &0l.(x\ 

Cancellation  of  the  Btamp,  we  have  seen,  is  obligatory  under  a  like 
penalty,  upon  the  person  issuing  or  negotiating  a  cheque,  stamped  with 
an  adhesive  stamp.)  y) 


[*104]  'CHAPTEB    TIL 

BILLS   oF   EXCHANGE   PAYABLE   AT   BANK] 

We  will  next  pass  to  the  consideration  of  the  duties  of  bankers,  and 
their  liabilities  and  rights,  as  regards  bills  of  exchange,  made  payable  at 
their  banking  houses. 

Formerly,  it  was  fur  a  long  time,  much  disputed  whether  a  bill  of  ex- 
change drawn  generally,  but  accepted  payable  at  a  particular  place  named 
«.n  it,  ought  to  be  presented  at  that  place,  in  order  to  show  a  cause  of 
action  by  the  holder  against  the  acceptor.  At  length  this  doubt  was  Bet 
at  rest  by  a  derision  of  the  House  of  Lords,  which  declared  the  law  to 
be,  that  an  acceptance,  payable  at  a  specified  place,  was  a  qualified 
.  which  imposed  upon  the  plaintiff,  in  an  action  against  the 
acceptor,  the  necessity  of  Btating  and  proving  presentment  at  that  place, 
in  order  to  recover  on  the  bill.(^)  The  legislature,  however,  thought 
this  part  of  the  law  required  Borne  alteration,  and  accordingly  the  statute 
1  &  2  I  '•  i.  IV.  e.  7V.  wa-  passed,  enacting,  that  an  acceptance  payable, 
on  the  face  of  it,  at  a  particular  place,  shall  bo  considered  to  be  a  gene- 
ra] acceptance,  unless  it  be  expressed  to  he  payable  there  only,  ami  not 
otherww  ",•  elsewhere.  It  is  of  little  avail,  therefore,  that  an  acceptor, 
Wishing  to  have  his  hill  paid  by  his  banker-,  states  on  the  bill  that  he 
I  .  ■-,   accepts    it.  to    be    paid  at  hi>    bankers,  unless  he  adds  the  words 

''J  "and  not  otherwise,"  or  the  word  'b'-'V')    The  statute,  *it 

(*)  '■  '>i  ■  r>.  v.  Abraham,  2  East,  1'.  ('.  941. 

rter,  l  Den.  0.  0.  ';">:   i  <'.  &  K.  1  n. 

tone,  i  I'liill.  I'..|.  i;.  294  ;  Beming  v.  Clutterbuck,  1  Bli.  (X. 
rine  v.  Ferrier,  7  Sim.  Gongh  v.  Findon,  7  Exch.  48;  Barthol- 

■. .  Henley,  3  Pbillim.  31 7. 

1 HI.  c.  i-i.  -.  19  :  -  v.  Cnlverwell,  7  M.  &  W.  174. 

i     ing,  2  Bro.  fcB  —         Bligh.  391. 

Nicholls,  7  Dowl.  551.     A  person,  who  takes  a  qualified  acccpt- 
■  '.-■  .lr:uvor :  tor  non  constal  thai  in-  vi  ill  assent  to 
me  qnalifii  -V.  509.     Tin-  holdi  r  of  a  bill  may  refu 


BILLS    OF    EXCHANGE    PAYABLE    AT    BANKER'S.      105 

is  to  be  observed,  only  mentions  acceptances ;  it  has  been  decided  tbat  a 
drawer  cannot  render  the  bill  payable  only  at  a  particular  place,  by  stating 
it  to  be  so,  in  the  body  of  the  instrument,  so  that  a  bill  made  by  the 
drawer,  payable  at  a  particular  place,  is  nevertheless  accepted  generally, 
unless  the  acceptor  accepts  it  in  the  above  terms,  saying,  that  it  shall  be 
paid  at  that  place  only,  and  not  otherwise  or  elsewhere. (c) 

Since  the  statute  there  are  three  different  modes  (as  to  two  of  them, 
however,  differing  chiefly  in  form,)  in  which  a  bill  may  be  accepted;  1, 
generally;  2,  payable  at  a  banker's  named;  3,  payable  at  a  particular 
banker's  only,  or  not  otherwise  or  elsewhere. (cZ)  Now,  if  the  drawee 
accepts  generally,  there  can  be  no  doubt  he  undertakes  generally  to  pay 
the  bill,  at  maturity,  when  presented  to  himself;  if  he  accepts  in  the 
second  form,  then  the  holder  has  the  option  either  of  presenting,  to  the 
acceptor  himself,  or  at  the  banker's  specified,  and  that  within  banking 
hours ;  for  in  that  case  the  acceptor's  undertaking  is  to  pay  the  bill,  at 
maturity,  on  its  being  presented  in  either  way ;  if  the  acceptor  adopts 
the  third  mode,  then,  of  course,  he  excludes  the  holder,  from  any  other 
mode  of  presentment,  than  to  the  banker  named,  and  that  within  bank- 
ing hours,  (e)  Hence,  in  suing  an  acceptor  of  a  bill  accepted,  payable  at 
a  banker's,  in  the  second  mode,  it  is  not  necessary  to  allege  or  prove 
presentment  there,  (e)  In  suing  the  drawer,  however,  the  case  is  dif- 
ferent; for,  in  respect  to  such  action,  it  seems  still  to  be  necessary,  if  the 
bill  be  accepted,  and  be  accepted  payable  at  a  banker's  named  *by  r#i06~l 
the  acceptor,  to  allege  and  prove  presentment  there ;  ( /)  so  if  L 
made  payable  in  the  body  at  a  banker's,  and  accepted  generally  ;(/)  and 
if  the  bill  be  drawn,  payable  at  a  particular  place,  then  to  charge  the 
drawer,  it  is  necessary  to  show  a  presentment  at  that  place ;  for  such 
must  have  been  the  case  before  the  statute,  and  the  statute  was  not  in- 
tended to  alter,  and  has  not  altered,  the  liability  of  drawers  of  bills  of 
exchange :  it  is  confined  in  its  operation  to  the  case  of  acceptance 
alone. (</) 

If  a  bill  of  exchange  be  accepted,  payable  at  a  banker's,  three  months 
after  date,  and,  in  the  course  of  business,  is  indorsed  to  the  bankers, 
they,  on  suing  the  indorser,  have  no  need  to  show  that  they  presented 

take  a  special  acceptance  at  a  banker's.     Per  Lawrence,  J.,  and  see  Le  Blanc,  J., 
Parker  v.  Gordon,  7  East,  385 ;  see  Gammon  v.  Schmoll,  5  Taunt.  353. 

(c)  Selby  v.  Eden,  3  Bing.  611 ;  Fayle  v.  Bird,  6  B.  &  C.  531. 

(d)  It  Will  suffice  to  accept  payable  at  such  a  bank,  "and  not  other-wise,'  with- 
out adding  "only."     Higgins  v.  Nichols,  7  Dowl.  551. 

(e)  Halstead  v.  Skelton,  5  Q.  B.  92  ;  S.  C,  2  Dowl.  (N.  S.)  79  ;  Bailey  v.  Porter, 
14  M.  &  W.  44.  There  is  no  objection,  in  declaring  against  an  acceptor,  to  a  state- 
ment that  the  bill  is  accepted,  payable  at  a  particular  banker's,  though,  in  fact, 
the  acceptance  be  in  the  second  form.  Blake  v.  Beaumont,  4  M.  &  Gra.  7  ;  S.  C., 
1  Dowl.  (N.  S.)  697  ;  see  21  Vin.  Abr.  463,  464.  But  in  such  case,  as  the  acceptor 
engages  to  have  funds,  at  the  bank,  to  meet  the  bill,  if  it  is  not  paid  he  is  not,  in 
general,  entitled  to  notice  of  dishonour.  Turner  v.  Haydon,  4  B.  &  C.  1.  That 
the  presentment  must  be  made  within  banking  hours,  see  Parker  v.  Gordon,  7 
East,  385  ;  Whitaker  v.  Bank  of  England,  1  C.  M.  &  R.  744  ;  Wilkins  v.  Jadis,  2  B. 
&  Ad.  188  ;  may  be  made  after,  if  the  bank  be  not  shut,  or  if  any  one  be  left  to  say 
if  there  are  no  orders.     Garnett  v.  "Woodcock,  6  M.  &  Selw.  44. 

(f)  Gibb  v.  Mather,  8  Bing.  214;  S.  C,  2  Cro.  &  J.  254. 

(g)  See  Boydell  v.  Harkness,  3  C.  B.  168  :  S.  C.,  4  Dowl.  &  L.  179. 


106  Hfl    OH    Tin:    law    OF    BAH  KIN  6. 

;  t  >r ;  for,  as  the  bankers,  :it  whose  house  the  bill  was  to  be 
paid,  were  themselves  the  holders  of  it.  it  was  a  sufficient  demand,  for 

tin-in  to  turn  tt.  their  1 k.-,  and  ascertain  the  statu  of  the  acceptor's 

.■it.  with  tin-in,  and  a  sufficient  refusal,  to  find  that  he  bad  do  effects 
in  tlu-ir  hands  \(h  i  and  a  letter  written  on  the  day,  when  the  bill  became 
due,  to  the  defendant,  on  behalf  of  the  banker,-,  Btating  tbe  acceptor's 
bill  t<>  be  unpaid,  and  requesting  the  defendant's  immediate  attention  to 
it.  is  Buffioienl  notice  of  dishonour. (h) 

r  liselv  the  same  has  been  laid  down,  as  the  law  with  respect  to  a 
promissory  note,  stated  by  the  maker,  in  a  memorandum,  to  be  payable 
at  a  banker's,  to  whom  it  beeaine  indorsed  iii  the  course  of  business,  and 
who  Bued  the  indorser.(t) 

r*i(,--i  The  drawer  of  a  bill  of  exchange,  accepted  generally,  f*subse- 
L  -I  quentlyto  the  passing  of  the  statute  1  &  2  Geo.  IV.  o.  78,) 
added  the  words  '-payable  at  R.  &  Co.'s  bankers,  London,"  without  the 
knowledge  of  the  acceptor,  and  then  indorsed  it  for  valuable  considera- 
tion, the  bill  being  overdue,  and  the  indorsee  privy  to  the  alteration. 
The  acceptor  was  held  to  be  discharged;  notwithstanding  the  argument 
which  was  pressed,  that,  since  the  statute,  this  was  only  a  general  accept- 
ance, and  that  no  demand  was  necessary  against  the  acceptor,  and  that, 
consequently,  in  an  action  by  the  indorsee  against  the  acceptor,  it  was 
not  p  issible  to  contend  that  lie  was  prejudiced.  (&) 

A  bill  is  accepted  payable  at  a  bank,  which  is  also  that  of  the 
drawer;  the  drawer  discounts  it  with  them,  and  indorses  to  them  ;  they 
rediscount,  and,  on  maturity,  pay  it,  without  indicating  to  the  holder 
whetb  t  they  pay  as  indorsers,  or  a-  agents  for  the  acceptor.  The  ac- 
ceptor's account  being  overdrawn,  the  bank  give  notice  of  dishonour  to 

the  drawer,  and  he  is  debited  with  the  amount.  It  was  held,  they  had 
a  right  to  pay  tin;  bill  as  indorsers,  taking  time  to  inquire,  if  they  Would 
honour  the  bill  or  not.(/) 

Again,  when-  a  drawer,  after  getting  a  bill  accepted,  payable  at  a 
hanker'.-,  kept  the  hill  by  him  for  some  year.-,  during  which  period  the 
bankers  became  bankrupt,  and  then  having  erased  their  names,  and  sub- 
stituted   the    name    of  another    banker,    without    the   knowledge    of  the 

acceptor,  indorsed  the  bill,  it  was  decided  thai  the  acceptor  was  dis- 
charged,  the  alteration  being  considered  to  be  materiaL(m) 

The  effect  of  returning  a  bill  accepted,  payable  at  the  acceptor's  bank, 

to  tie-  indorsee's  bankers,  at  the  Clearing   House,  with  "order-  not  to 

written  on  it,  and  "cancelled  b\  mistake"  also,  is  to  disable  the 

i'"1"1  linst    the   banker.,   as    for   money    had    and    n- 

(*)  '  IM.4W.44.     Aa  to  the  latter  point,  see  Allen  T.Edmund- 

. IEj  Bti  rard  r.  Watson,  r:  L.  .J.,  Q.  B.  222. 

S&troderson  v.  Judge,  'J  II.  Bla,  509. 

Burchfield  v.  Moore,  23  L.  J.,  0. 
B.  261. 

P  .1!  ird  v.  I  I 

I  idmarsfa  v.  Ororer,  l  M.  &  Seta 
(n)  Warwick  < 


BILLS    OF    EXCHANGE    PAYABLE    AT    BANKER'S.      107 

*If  a  bill  be  accepted,  payable  at  a  particular  town,  present-  r-^-inn-, 
inent,  it  is  said,  at  all  the  banking  bouses  in  the  town  is  suffi-  L  J 
cient.(o) 

If  a  bill  be  accepted,  payable  at  a  particular  place,  the  acceptance,  as 
before  shown,  is  general ;  it  is,  therefore,  needless  to  state  any  thing 
about  the  place  in  declaring  against  the  drawer;  such  presentment,  as 
the  form  of  acceptance  requires,  being  only  matter  of  evidence ;  it  is 
also,  in  some  cases,  objectionable,  to  state  the  special  acceptance,  for  if  the 
special  acceptance  be  stated,  then,  on  suing  the  drawer  or  indorser,  it 
may  become  necessary  to  state  such  presentment  as  the  acceptance 
requires,  and  the  omission  to  do  so  might  be  taken  advantage  of;  though 
it  would  not,  perhaps,  be  available  after  verdict,(p)  in  all  cases. 

If  a  bill  is  made,  payable  at  a  particular  bank,  by  the  acceptor,  then, 
in  an  action  by  indorser  against  drawer,  it  is  not  necessary  to  allege  a 
presentment  to  the  acceptor  at  the  bank ;  it  has  been  decided  to  be 
enough  to  aver  the  presentment  to  have  been  made  there. (a) 

It  has  been  stated  that  the  effect  of  acceptance  at  a  named  bank,  is  to 
give  the  holder  the  option  of  presenting,  either  at  the  bank,  or  to  the 
acceptor  himself  ;(>•)  it  is  a  further  effect  of  such  acceptance,  (or,  perhaps, 
is  only  another  mode  of  stating  the  same  thing,)  that  if  the  holder  pre- 
sents at  the  bank,  and  is  refused  payment,  he  may  sue  the  other  parties 
to  the  bill,  without  any  other  presentment. (s\  But  the  acceptor,  having 
funds  to  meet  the  bill  in  the  banker's  hands,  is,  nevertheless,  not  appa- 
rently exonerated,  if  they  fail,  after  *the  maturity  of  the  bill,  r^  nQ-, 
but  before  it  has  been  presented,  M  although  the  holder  is  in  L  J 
default. 

A  person  who  accepts  a  bill,  payable  at  his  bankers',  is  held  thereby 
to  give  authority  to  the  bankers,  to  apply  to  the  payment  of  it,  any  funds 
of  his,  in  their  hands,  and  there  is  no  necessity  for  them,  to  have  any 
other  or  more  specific  authorization,  than  the  terms  of  the  acceptance 
itself. (»)  But  from  what  has  already  been  laid  clown,  to  the  effect  that 
bankers  are  bound  to  know  the  handwriting  of  their  customer,  and  what 
is  not  his  handwtiting,  it  is  manifest  they  would  not  be  exonerated  if 
they  paid  the  bill,  and  it  turned  out  that  the  acceptance  was  forged. (xj 

(o)  Hardy  v.  Woodroofe,  2  Stark.  319. 

(p)  Lyon  v.  Holt,  5  M.  &  W.  250 ;  Parker  v.  Ade,  1  Dowl.  643 ;  see  Wilmot  v. 
Williams,  7  M.  &  Gra.  1017  ;  Boydell  v.  Harkness,  3  C.  B.  168;  S.  (J.,  4  Dowl.  & 
L.  179. 

(q)  Shelton  v.  Braithwaite,  8  M.  &  W.  252  ;  see  S.  C,  as  to  notice  of  dis- 
honour. 

(r)  De  Bergareche  v.  Pullin,  11  J.  B.  Moore,  350;  Roach  v.  Johnston,  4  Jur. 
956. 

(s)  Mackintosh  v.  Haydon,  Ry.  &  M.  362;  Hankey  v.  Berwick,  4  Bing.  135. 

(t)  Rhodes  v.  Gent,  5  B.  &  A.  246  ;  Turner  v.  Haydon,  4  B.  &  C.  1,  qu.  tam. 

(m)  Kymer  v.  Laurie,  18  L.  J.,  Q.  B.  218.  If  the  customer  afterwards  commits 
an  act  of  bankruptcy,  and  then  repays  them  the  difference  between  the  amount  of 
the  bill  and  his  assets  with  them,  such  payment  is  not  protected,  Holroyd  v.  White- 
head, 5  Taunt.  440  ;  S.  C,  2  Rose,  145,  and  the  bankers  cannot  sue  on  the  bill,  for 
it  is  functus  officio,  by  the  law  merchant,  when  once  paid  by  the  acceptor,  and 
also  may  not  be  reissued,  by  the  express  provision  of  55  Geo.  III.  c.  184,  s.  19, 
under  a  penalty  of  502. 

(x)  Smith  v.  Mercer,  6  Taunt.  76 ;  S.  C,  1  Marsh.  453. 


10{j  GRANT    OS    TIM".    LAW    OJ    BANKING. 

'.  to  whom  payable. — But  to  whom  does  the  acceptor  authorize  and 

order  hia  bankers  to  pay?     I-  it  to  the  lawful  holder,  or  to  whom,  that 

the  law  merchant  justifies  the  banker  in   paying  the  amount?     The 

answer  is  the  banker  waa  justified  in  paying,  not  merely  to  a  lawful 

holder,  but  to  any  one  who  ran  give  him  a  lawful  discharge,  according 

to  the  law  merchant.     Therefore  a  banker  paying  a  bill,  accepted  by  a 

w,  but  bearing  an  indorsement,  purporting  to  be  in  the 

handwriting  of  the  payee,  but  being,   in   tact,  a  forgery,  and  being 

ted,  after  this  and  other  indorsements,  had  been  made  ou  the  bill, 

and  presented  at  the  clearing  house  by  a  banking  firm,  who  were 

indorsees,  was  aot,  it  has  been  held,  justified,  by  reason  of  such  forged 

..  n  indorsement,  in  paying  to  the  holder,  or  indorsee,  *who  could 

L        -I  not  give  a  legal  discharge,  and  consequently  the  hanker  could 

■   the  account  of  the  acceptor,  with  the  sum  paid,  but  must 

If  bear  the  loss.fv)    Now,  however,  the  law  appears  to  be  altered 

by  Btatute,(z)  bo  that  a  banker  is  safe  iii  paying  a  bill,  which  purports  to 

be  indorsed  by  the  payee. 

If,  when  a  person  accepts  a  bill,  payable  at  a  banker's,  his  acoounl 
with  them   is  in  such  a  state,  as  nut  to  be  adequate  to  pay  the  whole 
amount,  for  which  the  bill  is  accepted,  it  appears  doubtful  whether  the 
law  enables  the  bankers,  if  they  pay  the  whole  amount,  to  recover  from 
the  customer  the  difference  between  the  amount  of  his  moneys  in  their 
hands,  and  the  sum  in  the  bill.(a)     It  clearly,  however,  does  not  affect 
the  question,  of  the  authority,  that  the  customer  did  not  intend  the  bill 
paid;  the  drawer  having  become  bankrupt. (a)     Nor  is  the  relative 
in  of  the  bankers,  to  the  customer,  affected  by  the  circumstance, 
that  after  the  payment  they  endeavoured  to  get  back  the  money,  treating 
payment  made  by  mistake,  or  that  they  had  subsequently  honoured 
16,  drawn  by  him  upon  them. (a) 
A  banki  r,  receiving  a  Bum  for  the  express  purpose  of  taking  up  a  bill, 
payable  at  his  bank,  without  objection  at  the  time,  cannot  apply 
discharge  the  amount,  by  which  the  customer  paying  in  the  money, 
has  overdrawn  his  account,  nor  ought  he  to  pay  cheques,  drawn  subse- 
quently to  the  bill,  before  he  pays  it  (A) 

BUI  when  paid. — Next,  when  i*  a  bill  made  payable  at  a  banker's 
said  to  1"'  paid?  Now,  in  all  cases  of  a  contract  to  pay  money,  that  can 
only  properly  be  called  payment,  which  is  payment  according  to,  and  in 
r*im  *''''  *  Q8e  "'''  ''"'  *,'"l,,r;"'t  f{pb)  s"  that  payment,  by  a  Btranger, 
L  -I  does  not  discharge  the  party  contracting  to  pay,  unless  made,  by 
jtranger,  as  hie  agent,  and  with  hia  prior  authority  or  subsequent 
ratification.  Eence,  payment,  by  a  Btranger,  of  the  amount  of  a  bill  of 
inge,  t"  tie-  hanker-,  at  whose  house  it  was  made  payable  by  the 


.  icker  v.  Robarts,  L6  Q.  B.  560,  ba  em  .,  17  Vict.  <■.  :,w)  s.  10. 

a  L7  Vi't.  c.  59,  B.  1:'.  (")  Bee  note  («),  ante,  ]>.  109. 

De  Bernalet  v.  Puller,  1 1  Bast,  590,  a.     :  •■  of  army  ami  navy  agents. 

.  ;'  U   ".  Esp. 

:.  ginton,  24  L.  J.,  Bxch.   :::::  Church  v.  Bishop,  -  Yes.  sen. 
Hopper's  1  L10;  Smith  \    Craven,  1  Cro.  a:  J.  500:  see  Cro. Eliz. 


BILLS    OF    EXCHANGE    PAYABLE    AT    BANKER'S.      109 

acceptance,  under  an  arrangement  with  thern,  whereby  the  person  paying 
obtained  possession  of  the  bill,  for  a  collateral  purpose  of  his  own,  is  not 
a  payment  of  the  bill  by  the  acceptor. (c) 

Caution  as  to  paying. — The  facts  and  the  decision  upon  them,  about 
to  be  stated,  furnish  proof,  if  any  be  required,  of  the  extreme  caution 
which  bankers  are  bound,  in  order  to  protect  themselves,  to  exercise, 
in  the  payment  of  bills  accepted  by  customers,  payable  at  their  banking 
house. 

A  bill,  purporting  to  be  accepted  by  a  customer,  payable  at  his  bankers', 
was  presented  to  them  and  paid.  The  bankers,  on  the  following  day, 
discovered  the  acceptance  to  be  a  forgery,  and  demanded  back  the  money, 
from  the  holder,  to  whom  they  had  paid  it ;  but  it  was  laid  down  by  the 
court,  that  the  holder  was  entitled  to  know,  on  the  day  on  which  the 
bill  became  due,  whether  it  was  honoured  or  dishonoured,  and  that,  no 
notice  of  the  forgery  having  been  given  him,  on  the  day  the  bill  became 
due,  the  bank  could  not  recover.  Moreover,  the  court  expressly  abstained 
from  pronouncing  any  opinion  whether,  if  notice  of  the  forgery  had  been 
given,  to  the  party,  to  whom  payment  had  been  made,  at  a  later  period 
of  the  day,  on  which  the  payment  was  made,  so  as  to  enable  him  to  send 
notice  to  the  prior  parties  on  that  day,  the  bank  would  have  been  entitled 
to  recover.  (d) 

*  Where  a  bank  only  discounts,  for  a  third  party,  a  bill,  pur-  r^ ..  „-. 
porting  to  be  accepted  by  a  customer,  it  is  different,  it  seems :  L  "'J 
and,  upon  finding  out  the  forgery,  (it  has  been  held,)  the  banker  may 
recover  from  the  third  person. (d\ 

Cancellation. — A  bill  of  exchange  was  accepted,  payable  at  Ladbroke's, 
with  a  direction  written  on  it,  in  case  of  need  to  apply  at  Boldero's. 
The  bill  was  dishonoured  at  Ladbroke's,  and  thereupon  brought  to 
Boldero's.  He,  thinking  it  had  been  made  payable  at  his  house,  under 
that  mistake,  cancelled  the  acceptance,  but  presently  observed  his 
mistake,  and  wrote  under  it  these  words, — cancelled  by  mistake,  and 
signed  his  initials.  Nevertheless,  he  paid  the  bill,  for  the  honour  of  the 
plaintiffs,  whose  indorsement  was  on  the  bill :  they  were  held  entitled  to 
recover,  upon  the  bill,  against  a  prior  indorserj(e)  so  that  the  mistake 
did  not  render  the  bill  a  nullity  between  those  parties  to  it. 

As  a  cancellation,  by  a  mistake,  of  an  acceptance,  does  not  bind ;  so 
as  is  well  known,  an  acceptance  may  be  retracted,  provided  it  have  not 
previously  been  communicated  to  the  holder  of  the  bill,  although  the 
acceptance  were  not  originally  given  by  mistake,  but  with  the  intention 
of  really  paying  the  bill  at  maturity.  (f\ 

Protested  Bill. — A  customer  of  a  bank,  upon  whom  a  bill  has  been 
drawn,  payable  at  the  banker's,  remits  money  to  them,  to  meet  and  take 
up  the  bill,  two  days  after  it  became  due ;  the  bankers,  on  tendering  the 
money  to  the  holder  of  the  bill,  find  it  has  been  sent  back  to  the  indorser 
protested  for  non-acceptance;  they  are  not  liable  to  the  holder,  if,  on 

(c)  Deacon  v.  Stodhart,  2  M.  &  Gra.  317. 

\d)  Cocks  v.  Masterman,  9  B.  &  C.  902,  908. 

\d)  Fuller  v.  Smith,  1  Car.  &  P.  197.     '      (e)  Raper  v.  Birkbeck,  15  East,  17. 

(/)  Cox  v.  Troy,  5  B.  &  A.  474. 


UU  \    THE    LAW    OP    BANKING. 

1K1V:.  |  fresh  orders  from  die  customer  not  to  pay  the  bill,  they 

.  when  ii  is  presented  subsequently  by  the  holder.^) 
'Money  paid  in,  by  ■  customer,  expressly  for  the  purpose  of 

I  J  paying  a  bill,  accepted  by  him,  and  lying  at  the  bank  for  pay- 
ment, is  money  paid  and  received  to  the  use  of  the  owner  of  the  bill,  and 
oannot  be  applied  to  the  general  account  of  the  customer.(A) 

/,'.  -  tcdtop  '//• — Even  it'  a  banker,  at  whose  house  a  bill  is  accepted 
payable,  by  mistake,  (not  under  circumstances  Bhowing  want  of  due  care,) 
cancel  the  acceptance  and  refuse  to  pay  the  bill,  he  does  not  necessarily 
render  himself  liable  to  the  holder,  In  an  action  on  the  cast-,  orother- 
;  for  instance,  he  will  not  be  liable,  it'  he  have  no  effects  of  the 
acceptor's  to  meet  the  l>ill.(/) 

/.\  fused  to  ta&t . — The  holder  of  a  bill  maj  as  has  already  been 

stated,  to  take  an  acceptance   payable  at  a  banker's  ;    on  the  Other  hand, 

the  acceptor  may  refuse  to  pay  a  bill,  which,  after  a  general  acceptance 
by  him.  has  been,  without  his  consent,  altered  bo  as  to  appear  to  be  pay- 
able at  a  banker's,  but  he  oannot  avail  himself  of  this  defence,  on  the 
traverse  of  the  acceptance,  in  an  action  by  the  indorsee,  such  alteration 
not  rendering  a  new  Btamp  necessary,^')  but  it  must  be  specially 
pleaded. (A;)  The  ground  is,  that  the  contract  is,  by  the  alteration,  made 
a  different  one,  from  that  into  which  he  entered.(Z)  But  it  docs  not 
appear  that  Buob  an  alteration  of  the  bill,  as  an  acceptance,  by  mistake, 
ex.  .-//•"..  as  iii  the  last  paragraph,  operates  to  affect,  in  any  way,  the 
liabilities  of  the  other  parties  to  the  bill,  both  because  such  is  not,  it  is 
believed,  the  usage  of  merchants,  and  because  such  alteration  dot's  not, 
in  in  fact,  vary  the  contract  *into  which  the  other  parties  enter, 
J  with  respect  to  the  bill;  for  the  liability,  which  they  originally 
undertook,  was  to  pay  the  bill,  in  case  the  drawee  did  not,  and  the  refusal 
j.t  merely  ascertains  and  announces,  that  he  will  not  make  himself 
liable  to  pay.  It  is,  therefore,  submitted,  thai  such  alteration  is  not  a 
materia]  alteration,  such  as  to  destroy  the  validity  of  the  instrument  in 
i<,h,,  within  the  meaning  of  the  principle,  as  applied  to  deeds,  and  nego- 
tiable and  other  instruments  of  contract. (m) 

Promissory  Notes. — Promissory  notes,  it  must  be  observed,  are  not 
within  the  above-mentioned  statute,  1  \-  1  Geo.  IV.  o.  78 \  the  conse- 
quenoe  i-.  to  make  it  necessary,  in  suing  on  a  promissory  note,  made 

le,  in  tin-   body  of  it,  at  a  bank,  to  aver  in    the   declaration,  and  to 

at  the  trial,  presentment  at  the  bank,(n)  ami,  in  this  n  Bpect,  there 
distinction  between  notes  which  are  negotiable  and  those  which  are 

•  (") 

.  !•  r.   1  I   East,  590,  n.  :    sec  12  M.  ,v  \\  . 

.        ;  ■  B.  .v  A«l.  751  :  Warwick  v.  Rogers,  5  M.  &  Gra.  340,  352. 

m  v.  Bradley,  1 1  M.  .v  \\ .  594. 

i  '-v.  I.  ,v  I..  641  j  9ee  Dai  Ldson  v.  Cooper, 

I I  M.  a  (i)  Burchfield  v.  Moore,  2  I  L.  J.,  Q.  B.  261. 

I    .M.  ,v   W.    117;  see 
per,  11  M.  S 
in  v.  Dartnell,  12  M.  &   ■  Vanderdonckt  v.  Thelueson,  19  L.  J., 

nda  \.  dark,  e  ('.  B.  761. 
G     lett,  1  Bz(  le 


ORDERS    ON    BANKERS.  HI 

Where,  however,  the  place  of  payment  is  not  mentioned  in  the  hody 
of  the  note,  but  merely  in  a  memorandum,  then  it  is  no  part  of  the  con- 
tract that  the  note  should  be  payable  at  the  bank,  &c,  and  it  is  not 
necessary  to  allege  it  to  be  so,(p)  and  so  presentment  there  is  not  neces- 
sary;^) and  in  such  case,  an  averment  that  the  note  was  payable  at  the 
bank,  is  not  only  not  necessary,  but,  if  made,  will  be  a  fatal  misdescrip- 
tion of  the  instrument,  (r) 


CHAPTER    IV.  [*H5] 

ORDERS    ON    BANKERS. 

One  of  the  duties  of  bankers  towards  their  customers  is,  in  general, 
to  obey  the  orders,  written  or  oral,  of  their  customers,  with  respect  to 
the  accounts,  of  the  customers,  with  them.  Some  decisions  have  been 
made,  on  written  orders  of  this  nature,  which  may  usefully  be  stated. 

A  customer  writes  to  his  bankers  thus  : — 

Waterford,  July  8,  1822. 

I  request  you  to  hold  me  400/.  from  my  private  account  to  the  disposal 
of  J.  Mintern  &  Co. 

Messrs.  Minet  &  Stride.  Wm.  Gibson. 

The  customer  delivered  this  order  to  one  of  Minterns'  house,  the  8th 
July,  when  there  was  in  the  bankers'  hands,  a  balance  of  400/.  in  his 
favour;  the  order  was  not  delivered  to  the  bankers  until  about  the  13th 
July ;  on  receiving  it,  one  of  the  bankers  wrote,  on  the  debit  side  of  the 
customer's  account,  "  N.  B.  By  Mr.  Gibson's  (the  customer's)  letter  of 
9th  of  July,  1822,  400/.  is  to  be  held  at  the  disposal  of  Messrs.  J.  Min- 
tern and  Co."  On  the  19th  March,  1823,  the  customer  countermanded 
the  order ;  the  bankers  communicated  this  to  J.  Mintern  and  Co.,  and 
asked  their  direction.  Mintern  and  Co.,  who  also  banked  with  the  same 
bankers,  wrote  to  them,  to  place  the  400/.  to  the  credit  of  their  account. 
The  bankers  did  so,  and  then  informed  the  customer,  that  they  had  trans- 
ferred the  money  to  Minterns.  Nevertheless,  it  was  held,  that  they  were 
wrong  in  doing  so,  for  that  the  countermand  was  good,  inasmuch  as,  at 
the  time  it  was  given,  no  payment,  and  no  appropriation,  *had  r>n  -.  ... 
been  made;(a)  the  jury  finding  that  the  order  was  executory,  L  J 
and  had  not  been  acted  upon. (a) 

Nearly  the  same  thing,  in  effect,  had  already  been  decided,  in  a  case 

(p)  Saunderson  v.  Judge,  2  H.  Bla.  510 ;  Masters  v.  Baretto,  19  L.  J.,  C.  B.  50 ; 
per  Lord  Campbell,  C.  J.,  Warrington  v.  Early,  23  L.  J.,  Q.  B.  48. 

(?)  Williams  v.' Waring,  10  B.  &  C.  2. 

(r)  Exon  v.  Russell,  4  M.  &  Selw.  505,  compare  Pannell  v.  Woodroffe,  reported 
in  Chitty  on  Bills,  254,  (6th  edit.) 

(a)  Gibson  v.  Minet,  1  Car.  &  P.  247 :  S.  C,  9  J.  B.  Moo.  31 ;  2  Bing.  7 ;  the 
memorandum  on  the  account  did  not  amount  to  an  assent.  See  Wedlake  v.  Hur- 
ley, 1  Cro.  &  J.  83. 

January,  1857. — 9 


HL»  Q KANT    ON    THE    LAW    OB    BANKING. 

wl,, :  reoeivea  a  letter  from  his  debtor,  Btating,  that  he  has  re- 

mitted bills  to  bis  bankers,  out  of  which  the  debt  is  to  be  paid.     The 
banki  ise  to  indorse  the  bills  away,  or  otherwise  to  act  on  the 

instructions  they  have  received,  and  it  is  considered,  that  the  property 
in  the  bills,  and  their  produce,  -till  continues  in  the  remitter.^    The 
bankers  got  the  proceeds  of  the  bills  when  due,  but,  from  the  first,  had 
refused  to  hold  them  on  the  specified  terms;  and  the  money,  so  held, 
msidered  to  have  been  money  had  and  received  to  the  use  of  the 
remitter  generally.     Thej  never  became  the  agents  <<f  the  creditor;  had 
nted  to  hold  the  money,  to  the  use  of  the  creditor,  they 
could  not  have  retracted,(6)  for  then  there  would  have  been  an  appro- 
priation irrevocable,  except  by  the  consent  of  all  parties. (c)     In  equity, 
■  r,  it  seems,  that  there  may  be  a  good  assignment  of  a  debt,  due 
to  the  assignor,  from  a  third  party,  without  the  assent  of  the  third 
party,  (e?)     In  the  above  case,  it  will  be  observed,  the  bankers  never  be- 
came debtors  to  the  remitter  on  the  proposed  terms.    On  the  other  hand, 
i*   the  bankers  had  paid  the  money  to  the  third  party,  such  payment 
!  have  been  good,  at  least,  if  they  had  acquiesced  in  the  order;  and 
they  would  have  been  discharged  as  against  their  customer. (e) 

In  circumstances,  it  seems,  such  orders  on  bankers  might  assume  the 
character  of  bills,  and  require  stamps, (/)  and  it  would  appear,  that  they 
r^-i-i--.  might  be  obligatory,  though  the  *word  pay  were  not  used,  if 
J  equivalent  words,  such  as  "credit  in  cash,"  were  used.(y) 
Such  an  order  need  not  be  in  writing,  as  has  been  before  stated; 
and  therefore,  if  a  man  held  a  bill  of  exchange,  of  which  another  was 
tie-  acceptor,  and  both  were  to  go  together  to  a  banker,  who  had  money 
of  tie   acceptor's  deposited  with  him,  and  it  was  agreed,  amongst  them, 
the  banker  should  hold  that  money  until  the  bill  of  exchange 
Bhould   he  satisfied,  and,  if  not  satisfied,  that  he  should    pay  the   bill 
out    of  that    money,    that   would  constitute  a  good   consideration,  and 
the  arrangement  could  not  lie  altered  afterwards,  except  by  the  cou- 
>■  n;  "1    all  parties. (&)     The  assent  of  the  banker,  to  the  order,  is  a  re- 
c<  gnition  that  the  customer's  account  with  him  is  in  such  a  state,  as  to 
show  that  he  is  debtor  to  the  customer,  and   therefore  bound,  accord- 
fche  usage  of  bankers  and  to  the  law,  to  conform  to  such  orders,  as 
le   ma\  receive  from  the  customer,  respecting  the  disposition  of  the  debt; 
hut  if  the  account  is  not   in  that  state,  but  he  is  in  advance  to   the  cus- 
r,  tin-  latter  has  no  right  to  call  upon  the  hanker,  to  make  a  further 
advance,  and  the   banker  has,  in  such   case,  the  option  whether  he  will 
.:  to  th.-  order,  if  given,  and  he  will  be  perfectly  justified  in  repudi- 
ating it.(i) 

•  n.  l|  Bast,  598  :  see  Si  "it  v.  I'ordicr.  :;  Meriv.  852;    Pai  - 
.  Mi. Mil-ton,  6  Hare,  261. 
W  a  i  M.  ••.  W.  111. 

'     'i.lcll.  12  Beav.  325;  8.  0.,  1  De  <:.  M.  .v  <: 
\\  barton  v.  Walker, 

■veil.  1  i  M.  ,v  W.  -lis. 
•  ■a  v.  Collingridge,  19  I.  .1    <'.  B.  268 
Lkei  ■ .  Roatron,  8  M.  .v  W.  121. 

nil.- 1    Everett    14  E 


ORDERS    ON    BANKERS.  113 

Also  it  is  quite  clear,  that  such  au  order,  when  made  iu  writing,  does 
not  require  a  stamp,  either  as  a  hill  of  exchange  or  as  an  agreement,  pro- 
vided the  order  embodies  nothing  more  than  a  mere  direction  to  hold  or 
pay  over  money  to  the  party  nained,(&)  and  provided  the  order  be  not, 
previously  to  its  coming  to  their  hands,  delivered  to  the  payee  :  in  case 
of  such  delivery  to  the  payee,  who  delivers  it  to  the  bankers,  a  bill  stamp 
is  necessary. (7) 

*  Order  to  distribute,  &c. — An  order  by  a  person  depositing  a  r*-Qg-i 
sum  of  money  at  a  banker's,  that  it  shall  be  distributed,  in  <-  J 
named  sums,  between  certain  named  persons,  does  not  make  the  bankers 
liable  to  those  persons,  or  any  of  them ;  they  are  only  responsible,  for 
the  sum  deposited,  to  the  depositor;  although  they  are  aware  of  the 
destination  of  the  money. (m)  Such  an  order  remains  revocable,  by  the 
party  giving  it,  until  the  occurrence  of  one  of  two  events, — the  payment 
over,  by  the  bankers,  to  the  persons  for  whom  the  sum  was  deposited ; 
or  the  making  of  some  binding  engagement  by  the  bankers  with  them, 
which  gives  the  latter  a  right  of  action  against  the  former.(w)  For  in- 
stance, had  the  bankers  stated,  to  those  persons,  that  they  held  the  money 
for  them,  having  assented  to  the  order  of  their  customer,  that  would  have 
rendered  them  liable  to  the  persons  for  whom  they  held  the  money,(o) 
for  their  assent  could  not  be  retracted,  (o) 

So  where  my  debtor  places  money  in  the  hands  of  his  banker  to  be 
paid  over  to  me,  on  the  happening  of  a  certain  event,  and  the  banker 
assents,  I  cannot  sue  the  banker  until  the  happening  of  the  event,  and 
only  then  (as  it  seems)  if  he  has,  besides  assenting,  conveyed  to  me  notice 
of  his  assent. (jo) 

Banker  as  Stakeholder. — But  when  money  is  placed  in  the  hands  of 
a  banker,  as  stakeholder,  then,  like  all  other  stakeholders,  his  authority, 
on  the  one  hand,  is  irrevocable,^)  and  neither  party  can  recover  the 
money  until  the  *event  has  occurred,(V)  provided  the  object  of  p-Qcn 
depositing  the  stake  be  a  lawful  one  ;(f)  and,  on  the  other  hand,  L  J 
the  party  who,  by  the  issue  of  the  event,  is  declared  to  be  entitled  to 
the  stake,  may  thereon  sue  the  banker  for  it.  Thus,  when  A.  obtained, 
from  the  Crown,  the  use  of  a  piece  of  land,  at  a  rent,  to  erect  galleries, 
&c,  on,  to  view  a  coronation,  &c,  and  underlet  part  of  it  to  B.,  on  the 
same  terms,  and  his  proportion  of  the  rent  was  paid  by  B.  to  A.,  but  was 
afterwards  deposited  in  the  hands  of  A.'s  bankers,  on  condition,  that  if 
no  coronation  took  place,  and  A.  was  remitted  the  rent  by  the  crown 
accordingly,  B.  was  to  have  returned,  to  him,  the  sum  so  deposited.    The 

(k)  Walker  v.  Rostron,  9  M.  &  W.  413. 

(I)  Parsons  v.  Middleton,  6  Hare,  261. 

(m)  Pinto  v.  Santos,  5  Taunt.  447.  As  to  operation  of  order  from  a  customer 
to  constitute  a  trust,  Gaskell  v.  Gaskell,  2  Y.  &  J.  510. 

(n)  Gibson  v.  Minet,  2  Bing.  7  ;  Williams  v.  Everett,  14  East,  592  ;  Scott  v.  Por- 
cker,  3  Meriv.  652  ;  Lillv  v.  Hays,  5  A.  &  E.  548  ;  per  Parke,  B.,  Brind  v.  Hamp- 
shire, 1  M.  &  W.  372;  Malcolm  v.  Scott,  5  Exch.  601 ;  Sewell  v.  Raby,  6  M.  &  \\  . 
25  ;  Hutchinson  v.  Hey  worth,  9  A.  &  E.  375. 

(o)  Fruhling  v.  Schroeder,  2  Bing.  N.  C.  77 ;  Walker  v.  Rostron,  9  M.  &  W.  411, 
421. 

(p)  See  cases  in  last  two  notes.  (q)  See  2  M.  &  W.  372,  373. 

(r)  Emery  v.  Richards,  14  M.  &  W.  728. 


H4        GRANT  OH  THE  LAW  OF  BANKING. 

coronation  took  place,  but  in  consequence  of  the  speculation  proving  on- 
profitable,  the  runt  was  remitted  to  A.,  who  refused  to  return  the  money 
paid  liim  by  1>.     The  Court  held,  that  I!,  was  entitled  to  recover,  from 

the  banker-,  the  BUUJ  de] 

Order  t<>  obtain  Acceptance. — It' a  person  delivers  a  bill  of  exchange, 
to  his  ban]  I  accepted  for  him  (he  being  payee,)  and  acceptance 

is  refused,  but  they  omit  to  communicate  the  circumstance  to  any  one, 
the  depositor  has  a  right  of  action  against  them,  and  may  recover  damages, 
in  proportion  to  the  injury,  he  can  show  he  has  suffered. (?) 

ler  to  transfer,  &c. — We  next  investigate  the  effect  of  an  order 
given  bv  a  customer  to  his  bankers,  directing  them  to  transfer  a  sum  of 
money,  from  his  account,  to. the  credit  of  another  person,  who  also  banks 
with  them. 

A  is  debtor  to  15.  A.  desires  his  bankers,  who  were  indebted  to  him 
largely,  to  place  to  the  credit  of  13.,  who  was  indebted  to  them,  a  sum  of 
money  (for  tr ■  •  ■  •  <  1  -  sold,)  so  as  to  make  the  same  as  a  bill  of  exchange  at 
..  one  month,  which  *the  bankers  consented  to  do,  but  only  con- 
J  sidered  it  as  a  payment  to  be  made  at  a  future  day.  Such  a 
transaction  does  not  amount  to  a  payment;  and  where  the  bankers  be- 
oome  bankrupt  before  the  day,  on  which  the  credit  would  expire,  it  is 
held  that  A.  is  not  discharged  by  such  inchoate  payment. (h) 

<>,■</■/•  to  place  to   Credit,  &c. — So,  where  A.  pays  in  money,  to  be 

placed  to  the  credit  of  B.,  upon  a  condition  ;  the  money  in  the  meantime 

ad,  in  the  bankers'  books,  in  the  name  of  A.,  it  is  at  his  risk,  ami 

the  loss  i-  his,  if  the  bankers  fail,  before  the  condition  is  complied  with. 

though  1>.  had  written  to  desire  it  to  be  paid  in  generally. (x) 

In  a  case  where  A.,  in  October,  desires  1!.  to  pay  his  rent,  then  due 

.  into  A.'s  bankers,  and,  by  mistake,  the  money  is  not  then  paid. 

I. at  1!.,  having  also  an  account  at  the  same  bank,  orders  the  amount  to 

I..-  transferred  to  the  credit  of  A.,  which  was  done  on  Thursday,  the  8th 

ber.     1!.  next  day  writes  to  A.  mentioning  this.     A.,  living  at  a 

distance,  does  not  receive  information  till  Sunday,  11th  December;  the 

bankers  having  failed  Saturday.  LOtb  December.     This  was  held  to  be  a 

sufficient  paym  m  by  1!-,  although,  at  the  time  of  the  transfer,  B/s 

rerdrawn  by900Z.,and  he  had  no  general  directions  to  pay 

his  rent  into  the  bank.(y) 

/. /•  /•>  hold  at  Disposal,  <t  >c. — Where  a  customer  orders  his  banker 
to  hold  money  of  his,  at  the  disposal  of  A.,  to  whom  the  customer  writes 
word  of  what  he  has  done,  and  the  banker  advisee  A.  accordingly,  of  the 

ipl  of  tl rder,  and  of  his  having  registered  it,  but  declines  to  accept 

bills  for  any  part  of  the  amount.  Btating  that  he  i.~  in  advance  to  tin-  cus- 

._-_  toi      .  adding  however  that  Bhould  remittances  come  ^forward 

I  to  enable  him  to  meet  the  wishes  of  the  customer,  he  would  lose 

do  time  in  advising  A.     This  was  held  to  fall  short  of  an  absolute  con- 


k  it.  71 -j. 

A  art  v.  \\ 

(*)  Call         -.-.,.  1. 148.         (y)  Eyles  ▼.  Ellis,  4  Bing.  112. 


ORDERS    ON    BANKERS.  115 

tract  with  A.,  and,  therefore,  it  would  be  held  that  A.,  neither  at  law(z) 
nor  in  equity,(a)  had  any  remedy  against  the  banker. 

Order  to  invest,  &c— Although  there  is  nothing  of  a  fiduciary 
character  in  the  ordinary  relations  between  banker  and  customer,  who 
are,  in  those  circumstances,  simply  debtor  and  creditor;  the  latter  having 
the  right  to  call  for  his  money,  or  any  part  of  it,  immediately;  yet  if  the 
dealings  between  them  go  beyond  this  point,  in  any  way,  and  the  banker 
is  employed  by  the  customer  to  make  investments  for  him,  or  otherwise 
to  manage  his  monetary  transactions,  then  the  banker  is,  in  that  respect, 
the  agent  of  the  customer,  and  is  bound  to  observe  complete  good  faith 
in  the  performance  of  the  customer's  orders.  Consequently,  any  fraud 
in  the  banker's  dealings  will  be  considered  culpable  in  a  high  degree, 
and  will  be  severely  animadverted  on  and  punished  by  the  courts. 

The  well-known  case  of  Fauntleroy's  fraud  has  been  already  stated, 
in  which  the  partners  were  held  to  be  affected  with  knowledge  of  frau- 
dulent entries  made  by  him  in  the  books,  which  entries  they  had  in  fact 
never  seen.(&) 

Another  case  is  the  following,  which  it  has  been  admitted  to  be  diffi- 
cult to  support,  except  upon  the  sole  ground  of  the  fraud :  A.  gives 
orders  to  her  bankers  to  invest,  a  certain  sum  in  their  hands,  for  her  in 
the  Navy  Annuities,  which  they  state  to  her  that  they  have  done,  con- 
trary to  the  truth:  afterwards  A.,  as  surety,  joins  B.  in  a  promissory 
note  given  to  them;  the  bankers  become  bankrupts,  and  Lord  Eldon 
held,  on  the  ground  of  the  fraud,  that  the  money  due,  in  *respect  r*1221 
of  the  sum  ordered  to  be  invested  should  be  set  off  against  the  L  ""J 
debt  for  which  A.  had  become  surety,  and  that  the  assignees  should  be 
restrained  from  suing  either  A.  or  B.  in  respect  of  the  note.(c)  Such 
false  representation  by  bankers  has  been  said  to  be  indictable  as  a  con- 
spiracy.^) 

So  with  respect  to  securities  deposited  with  them,  as  exchequer  bills, 
certificates  of  shares,  coupons,  bonds,  debentures,  either  for  safe  custody, 
or  with  the  intention  that  they  shall  receive  the  interest  or  dividends, 
&c.  ;(e)  and  it  is  their  duty  scrupulously  to  perform  the  orders  of  their 
customers  touching  the  disposition  of  these  deposits. 

Persons  depositing  securities  with  bankers  ought  to  reflect  that,  in 
most  cases,  they  have  not,  and  cannot  have,  any  other  guarantee  for  the 
safety  of  their  deeds,  &c.  than  the  integrity  of  the  partners  individually. 
The  following  case  exemplifies  this.  A  customer  of  a  banking  firm, 
whose  practice  it  was  to  receive  deposits,  at  their  banking  house,  of  boxes 
of  securities  belonging  to  their  customers,  for  safe  custody,  lent  part  of 
the  securities  contained  in  his  box  to  the  firm,  upon  an  undertaking  to 
replace  them  in  three  months,  or  sooner  if  required,  and  he  afterwards 

(z)  Malcolm  v.  Scott,  5  Exch.  601. 
(a)  S.  C,  2  Mac.  &  G.  601;  see  6  Hare,  570. 

(6)  Supra,  p.  44,  and  see  Marsh  v.  Keating,  1  Mont.  &  A.  605  ;  Ex  parte  Bolland, 
Mont.  &  M'A.  315. 

(c)  Ex  parte  Stephens,  11  Ves.  24 ;  see  Ex  parte  Blagden,  2  Rose,  249  ;  b.  0.,  let 
Ves.  467. 

(d)  Auriol  v.  Smith,  18  Ves.  203. 

(e)  See  instance  Glyn  v.  Baker,  13  East,  509. 


116  8B  A  N  T    0  N    THE    LAW    OF    B  A  N  K  IHG. 

lent  "tlicr  pari  of  such  securities  to  A.,  one  of  the  partners  in  the  firm, 

on  h\-  own  separate  account,  other  securities  being,  on  both  occasions, 

sited  by  the  respective  borrowers,  according  to  agreements,  in  pledge 

for  those  which  were  borrowed.     After  the  expiration  of  three  months, 

from  the  time  of  the  first  loan,  the  firm,  with  the  consent  of  the  customer, 

sited  other  securities  in  the  box  in  exchange  for  those  first  pledged, 

afterwards  became  bankrupt,  when  it  appeared  that  the  customer 

had  been  regularly  credited,  in  the  1 ks  of  the  Brm,  with  interest  on 

all  the  securities  borrowed,  hnt  that  A.  had.  without  the  knowledge  either 
r*i->-n  of  bis  copartners  or  the  customer,  abstracted  *the  securities 
L        J  pledged  by  himself  upon  the  Becond  loan,  and  had  applied  the 

proceeds  to  his  own  individual  ti- 
ll  Id,  1-t.  that   the  value  of  the  securities,  lent  to  the  firm,  was  not 
i  contingent  debt  within  the  6  Geo.  IV.  c.  16,  -.  d  that,  as 

there  had  been  rw  ihnuin.l  for  their  replacement  before  the  bankruptcy, 
the  customer  had  no  proveable  debt  in  respect  thereof,  either  against  the 
joint  estate  or  any  of  the  Beparate  estai 

2nd.  That  the  firm  was  not  responsible  for  the  abstraction,  by  A.,  of 

!Uliti<  a  pledged  upon  the  second  loan,  although  the  key  of  the  box, 

:1  as  the  box  itself,  was  left  in  the  custody  of  the  firm,  inasmuch 

did  not  appear  that  the  firm  had  any  authority  to  open  the  box  or 

its  contents  j  and,  consequently,  that  the  customer  had  no 

right  of  proof,  in  respect  of  the  second  loan,  against  the  joint  estate, 

hut  only  against  the  separate  estate  of  A. 

And,    -  mfJr ,  even  if  the  firm  had  been  chargeable  for  the  abstraction, 
on  the  ground  of  negligence,  the  claim  would  have  been  only  a  claim 
tor  unliquidated  damages,  and,  therefore,  not  proveable  against  the  joint 
iff) 

toll,, wing  case  (which  illustrates  the  principle  that  a  partnership 
creditor  has  a  right  to  receive  payment  of  his  debt,  out  of  the  assets  of 
a  <1<  ceased  partner,  to  the  full  amount  of  his  demand,  against  the  original 
firm,  and  that  although  the  demand  may  arise  from  a  fraud  to  which  the 
deceased  was  ,,,,  party.  )(/<)  may  also  he  usefully  cited  her,-,  to  exemplify 
the  duties  which  hankers  owe  to  their  clients,  and  the  retribution  which 
tails  on  the  violation  of  them,  reaching  often  to  those  who  are,  in  no 
way.  guilty  of  the  crime  or  fraud  in  question. 

Certain  stock  W8S  transferred  to  a  partner  in  a  banking  house,  by  way 

iUlity,  for  money  borrowed  of  the   firm   by  a   customer.      The  debt 

,    |24"i  W9t  subsequently  discharged,  hut  *byconsent,  the  stock  was  DOt 

-•  retransferred.   The  stock  was  afterwards  fraudulently  dsiposed  of. 

Then    one   of  the  partners   died,  and,  after  his   decease,   the   remaining 

n  became  bankrupt.     Lord  Eldon  held  the  creditor  entitle. 1  to 

have  the  remaining  stock  transferred  to  him,  to  receive  the  residue  of 

•    if  possible,  out  of  the  estate  of  the  bankrupt  partners,  and  to 

•  the  de-eased  partners  estate  for  the  deficiency,  (t)     As  was 

177. 

r-   i  I'l'ill-  Oh.  i:  Oldakerv.  Layender,  5  Sim.  2 

'  ■  ■ 


ORDERS    ON    BANKERS.  H7 

observed  by  Lord  Eldon,  and  as  the  principle  appears  to  be  indisputably 
established,  "  the  deceased  partner's  estate  must  remain  liable,  in  equity, 
until  the  debts  which  affected  him,  at  the  time  of  bis  death,  have  been 
fully  discharged. "(i) 

In  such  cases  of  misapplication  of  stock,  the  creditor  may  elect  either 
to  consider  the  proceeds  of  the  stock  as  a  debt  due  from  the  deceased 
partner's  estate,  or  to  have  the  stock  specifically  replaced. (k\ 

Trust  Funds. — Again,  where  a  trustee,  under  a  will,  permits  a  trust 
fund,  as  the  moneys  are  from  time  to  time  realized,  to  be  paid  into  the 
hands  of  bankers  who  have  knowledge  of  the  trust,  and  one  of  the  firm, 
without  the  assent  of  the  trustee,  deals  with  a  portion  of  the  fund  by 
investing  it  on  mortgage;  there,  though  the  bankers  were  held  not  to  be 
jointly  and  severally  liable  in  the  character  of  trustees,  but  only  under 
a  liability  as  between  banker  and  customer,  yet,  on  the  bankruptcy  of 
the  bankers,  the  trustee  could  only  prove,  against  their  joint  estate,  for 
such  balance  as  was  in  their  hands  at  the  time  of  the  bankruptcy;  and 
it  seems  to  be  undecided  whether  the  sum  laid  out  on  mortgage  is  to  be 
considered  as  in  their  hands,  at  the  time  of  the  bankruptcy,  although  the 
mortgage  itself  must  enure  for  the  benefit  of  the  cestui  qui  trust. (I) 

Bankers  also  are  treated  in  some  degree  as  having  a  fiduciary  rH<19„-. 
Character,  as  regards  the  payment  of  cheques,  so  as  to  be  liable  L  ""J 
if  they  honour  a  cheque,  which,  they  have  the  means  of  knowing,  is 
drawn  in  fraud  of  the  depositor  of  the  fund  out  of  which  they  pay  it. 
Thus  where  the  receiver  of  an  estate  has  a  private  account,  and  then 
opens  another  account,  in  the  name  of  the  estate,  in  circumstances  to 
affect  the  bank  with  knowledge,  that  the  sums  placed  to  that  account, 
belong  to  the  owner  of  the  estate,  and  then  draws  a  cheque  on  the  estate 
account  and  pays  it  into  his  private  account,  the  bank  is  liable  for  the 
amount  to  the  owner  of  the  estate. (m\ 

On  the  other  hand,  if  a  customer  pays  in  a  cheque  to  his  account,  the 
bankers  cannot  refuse  to  give  him  credit  for  it,  merely  because  it  has 
been  improperly  received,  (n\ 

One  of  two  trustees  of  a  sum  of  stock,  sold  it  out  under  a  power  of 
attorney,  to  which  he  had  forged  the  signature  of  his  co-trustee,  and 
sometime  afterwards  absconded : 

Held,  that  the  Bank  of  England  was  compellable,  in  a  Court  oj 
Equity,  to  reinvest  the  stock  in  the  name  of  the  other  trustee. 

"The  liability  of  the  bank  is  constituted,"  said  the  Vice-Chancellor 
of  England  (Shadwell,)  «  by  the  act  of  the  11  Geo.  IV.  &  1  Will.  IV.  c. 
13,  by  which  the  four  per  cents,  were  converted  into  three-and-a-half  per 
cents.  First  of  all,  certain  enactments  were  made,  which  had  the  effect 
of  giving  an  option  to  the  different  proprietors  of  the  four  per  cents., 
either  to  accept  the  same  amount  of  stock  in  the  three-and-a-half  per 
cents.,  or  to  be  paid  off.  The  act  then  provided  that  the  dividends  of 
the  newly-created  stock  should  be  payable  at  the  Bank  of  England,  and 

(i)  Vulliamy  v.  Noble,  3  Meriv.  593.  (k)  Baring's  case,  1  Meriv.  611. 

(I)  Ex  parte  Burton,  3  M.  D.  &  De  G.  3G4. 

(m)  Bodenham  v.  Hoskyns,  2  De  G.  M.  &  G.  903. 

(a)  Tassell  v.  Cooper,  9  C.  B.  509,  526. 


IJv  .,  k\.\l     ON    THE    LAW    OF    BAN  KIN-:. 

that  the  -urns  for  tin-  payment  of  them  Bhould  be  issued  and  paid  out  of 
the  Consolidated  Fund.  I  notice  that,  with  reference  only  to  that 
singular  ground]  on  which  the  Court  of  King's  Bench  rested  their  judg- 
ment, in  the  case  of  Davii  v.  Th  Bank  of  EnolandJtA  when  it  was 
heard  in  error  \  namely,  that,  inasmuch  *as  the  declaration  did 
I  '"''J  not  allege  that  the  requisite  funds,  for  payment  of  the  dividends, 
had  been  Bupplied  to  the  bank  by  the  government,  there  was  no  liability 
on  the  part  of  the  hank.     Now,  it  Beems  to  me,  that  every  court  of  law 

OUght  to  take  it  for  -ranted  that  that  whieli  the  legislature  says  shall  he 

done,  ha-  he'ii  done;  hut.  however,  tie'  court  of  error  was  satisfied  to 
get  rid  of  any  difficulty,  in  that  case,  by  making  that  objection." 

•  •  Tie'  10th  Bection  of  the  act  provides  that  books  shall  he  kept  by  tin' 
hank,  in  which  the  names  of  the  proprietors  of  the  new  stock  shall  appear. 
.  the  loth  section,  a-  I  understand  it.  has  made  it  the  duty  of  the 
nor  and  Company  of  the  Bank  of  England  to  keep  an  account,  in 
books  to  be  provided  for  that  purpose,  which  shall  show  every  transfer 
and  assignment,  which  is  made,  by  parties  appearing  to  be  interested  in 
•  »ck  in  question.     They  arc  made,  if  1  may  use  the  expression,  the 
parliamentary  book-keepers  of  this  fund ;  and  it  is  a  duty  which  they 
owe  to  all  the  persons  who  may  he  interested  in  the  fund,  so  to  keep  the 
account  a-  that  it  may  distinctly  appear,  at  all  times,  what  transfers  and 
omenta  have  been  made.     And  my  opinion  is,  that  if,  at  any  time, 
there  has  been  stock  Btanding  in  the  name  of  A.,  and  afterwards  that 
stock  did  not  appear  (no  matter  from  what  cause)  to  be  standing  in  his 
name.   A.  would  prima  facie,  have  a  right  to  say,  '  bet  the  account  stand 
a-  it  <lid  on  a  given  day.'    If  it  can  be  shown  that  A.  himself  has  trans- 
ferred the  stock,  that  is  an   answer;   hut  the   hank  account  ought  to   be 
.vitli  regard  to  every  individual  who  ever  appeared  as  a  stock  pro- 
prietor, iii  such  a  manner  a-  to  show  what  the  account  really  is." 

■•  If  that  b<    SO,  it  follows,  as  a  matter  of  course,  that  relief  may  be  bad 
in  equity,  because  the   plaintiff  in  equity  has  to  allege  against   tin'  hank, 

■  Sou  are  hound,  by  law,  to  he  my  book-keeper  in  respect  of  my  stock, 
and  to  Bhow  nie  the  true  account  of  it;  and  if  I  can  show  that,  upon  a 

day,  Stock  Stood  in  my  name,  and  now  show  that  it  does  not  stand 

■  ,  ,_-.    "in  my  name,  and    1    have  not  authorized  the  transfer  of  it,  you 
I         J  are  responsible  to  me:  that  is  to  say,  you  must  make  the  account 

OUght   to  have  b1 1.'  " 

"This  appears  to  me  to  he  the  true  view  of  the  case;  and,  according 
t  .  that  view,  there  would  he  a  direct  right  in  every  person  who  was  in- 
ked in  tie  [uestion,  to  file  a  hill  against  the  Bank  of  Eng- 
land, to  have  any  error,  occasioned  by  the  hank,  corrected.  It  is  observ- 
able, that  an  action  gives  a  remedy  cirouitOUBly  only,  because  all  that 
can  bi  '  d  by  an  action  is  a  certain  Mini  of  money,  which  may  or 
may  not  he  sufficient  to  buy  a  fund  to  replace  the  Btockj  and  it  seem-  to 
t  the  true  view  of  the  case  i-  that   which    I   have  taken,  and  which 

m<  d  from  the  provisions  of  the  act  of  Parliament." 

\nd   I  further  think  that  the  view  which  I  have  taken  is  a  COmplefr 
ind  5  Barn,  .v  C 


ORDERS    ON    BANKERS.  HO 

answer  to  the  argument  that,  where  the  account  stands  in  the  names  of 
two,  they  are  joint  tenants,  and  each  of  them  may  transfer  a  moiety  of 
the  fund.  The  unsoundness  of  that  argument  is  apparent  from  this, 
that,  if  it  be  the  right  of  the  joint  tenant  to  transfer  a  moiety  of  the  fund, 
he  may,  (supposing  the  amount  of  it  to  be  4,000/'.)  first  transfer  500/. 
Then  500/.  will  remain  in  the  names  of  himself  and  his  co-tenant,  and 
he  may  transfer  a  moiety  of  that  500/. ;  and  so  he  may  go  on,  transferring 
moiety  after  moiety,  until  the  remainder  will  be  less  than  any  assignable 
quantity.  Virtually,  he  will  have  the  power  to  transfer  the  whole ;  and 
that  will  be  the  result  of  the  doctrine  that  a  joint  tenant  of  a  fund  has  a 
right  to  transfer  a  moiety  of  it.  In  my  opinion,  however,  it  is  apparent, 
from  the  plain  language  of  the  act  of  Parliament,  that  the  transfers 
were  to  be  made,  by  the  parties,  in  whose  names  the  stock,  which  was  to 
be  made  the  subject  of  transfer,  stood." 

"  In  this  particular  case,  the  very  view  of  the  law  which  I  take  was 
adopted  by  the  Bank  of  England ;  for  no  transfer  was  made,  except  on 
the  production  of  that  which  was,  apparently,  an  authority  of  the  two 
joint  tenants ;  but  it  turned  *out  not  to  be  the  authority  of  the  m  9S1 
two ;  and  my  opinion  upon  the  statute  is  that,  therefore,  it  was  a  L  d  J 
nullity:  and  the  bank,  having  authorized  a  transfer  which  they  ought 
not  to  have  sanctioned,  are  themselves  now  liable,  in  a  Court  of  Equity, 
to  restore,  to  the  parties  complainant,  the  stock  as  it  stood  immediately 
before  the  transfer."^) 

Illegal  Orders  of  Customer. — Bankers  are  not  unfrequently  liable  to 
be  made  responsible,  for  the  objects  of  those  who  lodge  sums  with  them, 
to  be  retained  and  paid  over  on  a  given  event.  Thus,  a  banker,  who 
permits  a  sum  of  money  to  be  paid  into  his  bank,  for  the  purpose  of 
being  paid  over,  for  corruptly  procuring  an  appointment  under  govern- 
ment, may  be  indicted,  for  a  conspiracy,  along  with  those  who  are  to 
procure  the  appointment  and  to  receive  the  money,  (o) 

The  same  principle  would  seem  to  apply  in  case  of  money  in  like 
manner  placed  with  a  banker  as  stakeholder,  as  it  were,  to  be  paid  over, 
after  an  election,,  for  the  purpose  of  bribery. 

So,  wherever  bankers  receive  money,  and  agree  to  hold  it  to  be  paid 
over  for  any  purpose  forbidden  by  the  law,  it  seems  they  would  be  alike 
liable,  for,  in  such  case,  an  individual  stakeholder  would  be  liable,  if 
fixed  with  a  knowledge  of  the  illegal  purpose,  and  bankers  are  in  no  dif- 
ferent situation  from  any  other  individual ;  they  are  not,  like  carriers, 
innkeepers,  &c.  obliged  to  serve  all  customers,  and  therefore  in  some 
respects  protected  by  the  law ;  it  is  at  their  option  whether  they  will 
open  an  account,  or  allow  money  destined  for  an  illegal  object,  to  be  paid 
in,  on  an  open  account. 

(p)  Sloman  v.  Bank  of  England,  14  Sim.  475,  485. 

(q)  R.  v.  Pollman,  2  Campb.  233.  This  is  at  common  law.  See  also  49  Geo. 
III.  c.  126,  s.  3,  and  49  Geo.  III.  c.  118. 


320  RANT   OK  THE    LAW    OF    BANKING. 

[*129]  OH  A  PTER    V. 

Arnn  tfTABLE   BSCHPTS,  ETC. 

Thk  subject  of  accountable  receipts,  given  by  bankers,  is  one  of  some 

importance,  bat  one  of  which  the  development,  by  means  of  judicial  de- 

.  does  00I  appear  to  be  in  proportion  to  what  one  might  desire;  in 

other  words,  hut  few  '|iiestions  on,  or  relating  to,  the  subject  have  been 

presented  to  the  Courts  for  decision. 

When  a  person  deposits  money,  with  a  banker,  without  intending  that 
it  Bhould  be  called  for,  from  time  to  time,  by  cheques,  it  is  sometimes 
the  practice,  for  bankers,  to  contract  to  pay  interest  on  the  moneys  thus 
lent  to  them,  and  to  give  an  accountable  receipt, — that  is,  a  memorandum 
of  the  receipt  of  the  principal,  an  acknowledgment  that  they  are  account- 
able for  it  on  demand,  and  a  promise  to  pay  interest  upon  it,  during  the 
time  it  remains,  in  their  hands  ;(a)  but  the  latter  clause  is  not  always,  or 
necessarily,  a  part  of  the  instrument. 

The  reader  will  remember  that  bankers  are  not  liable  to  pay  interest 
on  money  deposited  with  them,  in  the  absence  of  express  contract  to  do 

An  acknowledgment  in  this  form — 

«  Mr.  T.  has  left  in  my  hands  200?. 

«J.  A." 
not  require  a  stamp  to  make  it  evidence  ;(<•)  and  generally,  it  is  en- 
r#1 0^-.  acted,  that  "receipts  given  fur  money  deposited  *in  any  bank, 
L        J  or  in  the  hands  of  any  banker,  to  be.  accounted  for,  whether  with 
interest  or  not,"  are  exempt  from  stamp  duty,  "  provided  the  same  be 
not  expressed  to  be  received  of,  or  by  the  hands  of,  any  other  than  the 
:  to  whom  the  same  is  to  be  accounted  for."(d\ 
('/i'i,<:/>    of  Firm. — A  person  depositing  money  at  a  banker's,  and 
taking  their  accountable  receipt,  does  not,  by  continuing  to  leave  his 
money  in  the  bank,  after  a  dissolution  of  the  original  linn,  and   the  con- 
stituting of  a  new  one,  consisting  of  some  of  the  old  members  and  of 
other  persons,  discharge  the  former  partners  who  have  gone  out,  although 
ceives  interest  regularly  from  the  new  linn,  and  gives  no  notice,  and 
continues  to  transact  business,  with  them,  in  the  common  course,  and 
that  for  a  |"  riod  of  four  years,  until  they  become  insolvent.     Such  foots 
ar<-  not  sufficient  to  enable  a  jury,  to  com,:  to  the  conclusion,  that  he  did 


'•'•"  metimes  it  i-  stated  expressly  not  to  bear 

d  Btapleton  \.  Btapleton,  l  I  >\m.  L86,  187. 

!'..  a:  0.  .'•!!  :   Me  Taylor  v.  Steele,  1G  M.  k  W.  CG5  ; 

Oar.  .v  P.  204. 

A  it  Vict.  <■.  59,  schedule.    Acknowledgment  by  banker  of  receipt  of 

t,  by  allotted  of  ■hares,  does  not  require  stamp.     Clarke  v.  Chaplin,  1  Exch. 

i 


ACCOUNTABLE    RECEIPTS,    ETC.  121 

discharge  the  outgoing  members  of  the  firm,(e),  and  assent  to  transfer  the 
credit  to  the  new  firm,  though  he  had  made  fresh  deposits  with  them 
and  received  fresh  accountable  receipts  from  them.(e)  Of  course,  the 
outgoing  partners  are  not  liable  to  the  customer,  beyond  the  amount  due 
to  him,  at  the  time  of  their  retirement ;  on  the  other  hand,  the  incom- 
ing partners  are  not  liable,  for  debts  incurred  previously  to  their  joining 
the  firm :  so  that  a  customer,  suing  for  the  balance  of  his  account,  is 
liable  to  be  nonsuited,  upon  its  being  shown  that  one  or  more  of  the  de- 
fendants was  not  in  the  firm,  at  the  time,  when  the  cause  of  action  ac- 
crued^/) 

*In  the  case  in  which  this  general  principle  was  recognized,  m  qi , 
as  the  Statute  of  Limitations  would  have  been  a  bar  to  a  fresh  L  '  J 
action,  the  court — upon  affidavits  which  showed  that  the  defendants  had 
never,  during  some  negotiations,  which  extended  over  several  years,  respect- 
ing the  subject-matter  of  the  action,  raised  any  question  as  to  their  being 
the  proper  parties  to  be  sued,  and  had  averred  in  a  bill  filed  by  them 
against  the  plaintiff,  after  pleading  and  before  trial,  that  the  liabilities  of 
the  preceding  firm  had  been  transferred  to  the  defendants, — set  aside  the 
nonsuit,  and  gave  the  plaintiff  leave  to  amend  the  declaration  by  striking 
out  the  two  defendants,  who  had  been  erroneously  sued,  (although  it 
appeared  upon  the  bill,)  who  were  the  members  of  the  firm  when  the 
cause  of  action  accrued. (/) 

If  bankers  give  an  accountable  receipt  to  A.,  the  usual  course  of  deal- 
ing being,  to  pay  interest  on  the  amount  mentioned  in  their  receipts,  and 
A.  dies,  and  pending  a  contest,  for  the  administration  of  his  estate,  the 
accountable  receipt  comes  to  the  hands  of  a  stranger,  who  fraudulently 
gets  payment  from  the  bankers,  and  the  receipt  is  returned  to  them  and 
cancelled,  the  administrator  of  A.  may  recover,  in  equity,  against  the 
bankers,  the  principal  and  interest  due  upon  the  receipt,  as  well  as  the 
costs  of  the  proceedings. (#) 

Partnership  and  Bankruptcy . — A.  deposits  moneys  with  B.,  C.  and 
D.,  who  are  partners  in  banking,  carrying  on  business  under  that  firm, 
and  receives  from  them  promissory  notes,  in  which  they  promise  to  pay 
him  the  amounts,  three  months  after  sight  respectively,  with  interest. 
In  September,  1831,  A.  dies.  In  March,  1837,  B.  dies,  having  ap- 
pointed C.  and  X.  his  executors.  C.  and  D.  continue  the  banking  busi- 
ness, in  the  same  firm  as  before,  till  1842,  and  interest  is  regularly  paid, 
on  the  promissory  notes,  by  the  firm  until  that  time.  In  May,  1842,  the 
customers  of  the  bank  *are  invited  to  transfer  their  accounts  to  r^.-.  q9n 
the  Isle  of  Wight  Joint-Stock  Banking  Company.  In  December,  L  J 
1843,  C.  and  D.  become  bankrupts.  In  the  same  month,  the  executors 
of  A.  file  their  bill  in  equity,  against  the  executors  of  B.  and  the  devisees 


(e)  Gough  v.  Davies,  4  Price,  200;  Daniel  v.  Cross,  3  Ves.  277;  see  Blew  v. 
Wyatt,  5  Car.  &  P.  397.  See  as  to  evidence,  to  show  knowledge  of  retirement 
from  banking  firm  and  intention  to  credit  new  firm.  Hart  v.  Alexander,  2  M.  & 
W.  484.  It  might,  in  some  cases,  be  found  in  practice  more  desirable  for  the  cus- 
tomer to  transfer  the  credit  to  the  new  firm,  as  regards  the  question  of  enforcing 
the  responsibility.     Lyth  v.  Ault,  21  L.  J.,  Exch.  217. 

(/)  Craufurd  v.  Cocks,  6  Exch.  290.  {g)  Pearce  v.  Cresswick,  2  Hare,  286. 


!_._>        GRANT  OH  THE  LAW  OF  BANKING. 

under  his  will,  for  payment  of  the  amounts  of  the  promissory  notes,  out 
of  the  personalty,  or  real  estate  of  B.  The  acta  of  the  surviving  partners 
were  held  not  to  have  the  effect  of  taking  the  debt,  upon  the  notes, 
out  of  the  operation  of  the  Statute  of  Limitations,  as  against  the  real  or 
persona]  estate  of  the  deceased  partner;  for  that  acts  done  by  one  of  the 
surviving  partners,  who  was  executor  of  the  deceased  partner, — which 
the  Bun  Lving  partners,  as  such,  were  bound  to  do, — could  uot  prima 
facie  be  considered  to  have  been  done  in  the  character  of  executor.  The 
notes  were  dated  respectively — "J  1st  -January,  1826,  -2nd  January,  1831; 
28th  February,  l^.'i");  the  last  being  received,  by  the  executors  of  A.. 
for  moneys  deposited  by  them,  on  that  date.(A)  This  case  is  obviously 
will  deserving  of  notice,  as  regards  the  effect  of  the  Statute  of  Limita- 
tions. 

A.,  to  whom  the  Sheffield  and  Rotherhain  Bank  was  indebted,  takes 
accountable  receipts  for  the  sums  due  from  the  bank. 

The  course  of  dealing  was,  that  as  long  as  the  sums,  for  which  these 
receipts  were  given,  remained  in  the  bankers'  hands,  the  receipts  were 
returned  to  the  bank  once  a  year  to  be  cancelled,  when  the  interest,  for 
the  past  year,  was  cither  paid  or  allowed  in  account,  and  fresh  receipts, 
in  plan'  of  the  cancelled  ones,  were  given. 

A.  died,  and,  pending  a  contest  for  the  administration  of  his  ©statu . 
the  above-mentioned  accountable  receipts  came  into  the  hands  of  a 
Btrangi  r,  who,  by  a  fraud,  obtained  payment  of  the  Bums  due  upon  them; 
the  receipts  were  returned;  and  they  were  afterwards  cancelled  by  tear- 
ing off  the  signature  at  the  foot. 

r*"mi  The  administrator  of  A.  was  held,  there  being  nothing  to  *show 
L  °'  -I  that  the  receipts  were  transferable  BO  as  to  entitle  the  holder  to 
demand  paymenl  of  the  sums  represented  by  them,  to  be  in  a  position 
to  maintain  a  suit  in  equity,  against  the  bank,  for  payment  of  those 
rami 

II. t.  .  it  i-  to  be  observed,  the  mode  in  which  payment  was  obtained 
was  this: — The  receipts  were  presented  at  the  Worksop  Branch  of  the 
Nottinghamshire  Bank,  with  an  indorsement  purporting  to  be  that 
of  A.,  and  it  being  unknown  to  the  manager,  &c.,  of  that  branch  that 
A.  was  dead,  the  money  was  paid  and  the   receipt-  given  up;  their 

ac int  iras,  in  the  course  of  business,  charged  by  the  Nottinghamshire 

to  their  London  bankers,  to  whom  the  receipts  were  remitted; 

shortly  afterwards  the    Sheffield   and    Kotherham  Bank  direct    the   same 

London  bank*  credit  to  the   Nottinghamshire   Bank  for  the 

amount,  and  the  receipts  were  delivered  up,  to  the  Sheffield  and  Rothcr- 
ham  Hank,  who  were,  therefore,  wholly  innocent. (/) 

Infancy. — Bankers  cannot,  at  common  law,  as  it  seems,  bind  them- 

.  an   accountable  receipt,  for  money  deposited  with  them,  given 

on  behalf  of  an  infant.  (/•)     But,  in  equity,  bankers  may  enter  into 
did  accountable  receipt,  or  promissory  note  having  the  same  effect  as 
an  accountable   receipt,  with  a  trustee  for  an  infant.     Thus,  where 
banki  ra  made  a  promissory  note  in  the  following  form  : — 

(h)  v.  Fordham  r.  Willis,  10  Hare,  217. 

<        iriek,  2  Ham,  286.  (k)  CaUand  v.  Lloyd,  6  M.  &  W.  2G. 


ACCOUNTABLE    RECEIPTS,    ETC.  123 

Fourteen  days  after  sight,  I  promise  to  pay  to  Mrs.  H.  0.,  trustee  for 
J.  R.  W.,  or  order,  2000?.  with  interest  at  two  and  a  half  per  cent. 
For  0.  B.  M.  and  Hanbury. 

(Signed)  Daniel  Hanbury. 

and  the  account  was  kept  in  the  name  of  Mrs.  H.  0.,  as  trustee  for  the 
above-named  person,  an  infant,  these  acts  were  held  to  be  complete  to 
constitute  her  a  trustee  for  the  infant ;  and  the  bankers  were  held  to  have 
done  rightly,  at  *her  death,  in  paying  over  the  money  to  her  exe-  p^,  „.-. 
cutor,  since,  as  representing  Mrs.  H.  0.,  the  trust  devolved  upon  L  J 
him.(») 

Where,  however,  money  was  transferred  in  the  books  of  bankers,  by 
order  of  a  customer,  to  the  account  of  certain  persons,  of  whom  the  cus- 
tomer was  one,  but  there  was  nothing  to  show  that  the  others  had  ever 
had  notice,  and  there  was  some  evidence  that  the  transfer  had  been 
ordered  with  the  fraudulent  intent  of  evading  legacy  duty,(o)  and  that  he 
had  shown  an  intention  to  exercise  acts  of  ownership  over  the  fund ; 
there,  although  the  interest,  allowed  by  the  bank,  had  been  duly  carried 
to  the  credit  of  the  account,  it  was  held,  that  this  was  a  declaration  of 
trust  which  was  imperfect;  that  it  might  have  been  revoked,  in  which 
case  the  trustees  could  not  have  recovered  from  the  bankers,  on  the  one 
hand,  and  the  bankers  on  the  other,  could  not  have  refused  to  pay  to  the 
customer,  (p) 

But  where  one  of  the  partners,  in  a  banking  firm,  opened  an  account 
with  the  firm,  in  his  wife's  name,  for  the  education  of  certain  infant 
children,  and  caused  an  accountable  receipt  to  be  signed,  by  the  other 
partner,  on  behalf  of  the  firm,  purporting  to  be  for  800?.,  received  from 
the  wife  for  the  education  of  the  children,  and  caused  that  sum  to  be 
placed  to  the  credit  of  the  account  so  opened  in  the  wife's  name,  and  his 
private  account  to  be  debited  with  the  same,  the  transaction  was  consid- 
ered to  embody  a  complete  and  irrevocable  declaration  of  trust  in  favour 
of  the  children. (j) 

Alteration. — Altering  the  sum,  for  which  an  accountable  receipt  is 
given,  is  altering  in  a  material  part,  and  indictable  as  forgery,  M 

By  11  Geo.  IV.  and  1  Will.  IV.  c.  66,  s.  10,  it  is  felony  *to  r*^-, 
forge  an  accountable  receipt,  whether  for  goods  or  money,  or  for  L  -I 
any  note,  bill,  or  other  security,  for  payment  of  money ;  and  the  same 
of  altering,  and  of  offering,  uttering,  disposing  of,  or  putting  off,  know- 
ing the  same  to  be  forged  or  altered,  any  such  accountable  receipt,  with 
intent  to  defraud  any  person  whatsoever. (s) 

Operation  of  Ace.  Rec. — Where  it  was  the  practice  of  a  bank  to  treat 
such  receipt,  with  the  depositor's  name  thereon,  as  an  order  for  the  pay- 

(w)  Wheatley  v.  Purr,  1  Keen,  551;  see  Stapleton  v.  Stapleton,  14  Sim.  186; 
and  see  1  Phill.  55. 

(o)  See  Holliday  v.  Atkinson,  5  B.  &  C.  531. 

\p)  Gaskell  v.  Gaskell,  2  Y.  &  J.  510. 

(q)  Stapleton  v.  Stapleton,  14  Sim.  186. 

(r)  Reg.  v.  Johnston,  5  Cox,  C.  C.  133. 

(s)  As  to  the  punishment,  see  that  stat.  and  sect,  and  16  &  17  Vict.  c.  90,  ss.  1, 
2,3. 


\2\  ..KANT    OS    THE    LAW     01    LAN  KIN  (J. 

meat  of  the  money  deposited,  and  interest,  upon  the  receipt  being  pre- 
l  to  them,  and  the  defendant  took  the  reoeipt  to  the  bank,  and] 

hating  written  the  depositor's  name  thereon,  delivered  it  to  the  bankers, 

who  }>aiJ  him  the  principal  and  interest  due  thereon  ;  it  was  held,  that 
ub  properly  oonvioted,  nnder  an  indictment  framed  npon  sect.  3  of 

the  above  statute,  as   for  a  forgery  of  an  order  for  the  payment  of 

A  scrip  certificate  in  a  railway  company,  is  neither  "  an  accountable 
receipt,"  nor  "an  acquittance  or  receipt,"  within  the  meaning  of  sect. 
10,  of  the  above  Btatute,  and  therefore  the  forgery  of  such  document  is 
nut  a  felony,  but  a  misdemeanor  only.(«) 

"  Oiu  '»  Account  a-ttJt  one's  Bank*  r,  is  a  mode  of  Bpeaking  very  com- 
monly used ;  and  on  that  ground  it  seems  desirable  to  ascertain,  if  pos- 
sible,  the  legal  effect  of  the  term.     Now,  the  correct  application  of  the 

phrase  is  made,  only  when  it  is  used  of  an  immediate  account,  on  which 
a  person  can  draw  :  and  it  is  not  justly  applicable  in  a  case  where  a  per- 
son, having  an  immediate  account  with  a  provincial  bank,  which  has  fur 
spondents  and  agents  a  banking  house  in  London,  speaks  of  having 
pMQftn  :,u  account  with  the  *latter  house;  and,  if  he  orders  his  debtors 
L  J  to  pay  in  moneys  to  the  latter  house,  and  the  former  stops  pay- 
ment, the  accounts  between  the  houses  being  unsettled,  he  cannot  recover 
the  moneys  from  the  latter.  Also,  the  debtors  having  paid  in  the  moneys 
in  obedience  to  a  letter  from  the  creditor,  ordering  them  to  pay  in  "for 
our  account,"  and  having  no  directions  of  a  more  specific  nature,  will  be 
held  to  be  discharged. (cc) 

Deposit  /»'"■'  ipts  may  be  given  by  bankers,  in  such  a  way  as  to  cause 
a  double  liability;  as,  for  instance,  took  place  under  the  following  cir- 
cumstances. 

John  O'Brien,  father  of  Daniel  O'Brien  and  Catherine  Callaghan, 
lodged  a  -urn  of  150?.  in  a  bank,  upon  a  deposit  receipt,  in  his  own  name. 
Upon  Daniel's  producing  the  receipt  sometime  afterwards,  and  demand- 
ing  the  interest,  he  was  refused,  the  bank  paying  only  to  the  depositor 
in  person;  John,  upon  this,  used,  for  some  time,  to  come,  along  with 
Daniel,  and  receive  the  interest,  &c,  taking  the  fresh  receipt  in  his 
(John's)  name,  on  each  occasion.  Afterwards  he  obtained  permission, 
that  Daniel  should  receive  payments  upon  producing  the  receipt,  indorsed 
'  .•  •'  hn.  Then  Daniel,  by  his  directions,  pays  an  additional  sum  of  51. 
into  the  Lank,  and  obtains  a  new  deposit  receipt  for  the  whole  amount 
then  in  the  hands  of  the  bank,  being  L35?.,  but  in  the  name  of  Catherine 
ii.  (afterwards  Callaghan,)  Daniel  telling  the  manager  that  his 
t'atlnr  intended  I ■'>■>/.  to  be  the  portion  of  his  daughter  Catherine,  but 
desired  to  retain  a  control  over  it  during  his  life,  and  that  he  wished  the 
deposit  receipt  should  be  drawn  in  hex  name.  In  a  few  days  afterwards, 
John  O'Brien  died,  Daniel  took  out  administration,  testamento  <ninexo, 
and,  as  administrator,  claimed  the  ):;;,/.  Shortly  after,  Catherine  mar- 
ad  she  and  her  husband  demanded  payment  of  this  money.    Both 

.  Atkin=on,  far.  .t  M.  325.     .See  1  Oar.  &  K.  151. 
I")   '  131. 

Green,  Huh.  N.  l\  K.  2 


DEPOSITS    OF    SECURITIES.  125 

Daniel  and  Catherine,  with  her  husband,  commenced  ^actions  m„ 
against  the  bankers,  who  filed  a  bill  of  interpleader  against  both;  L  J 
but  the  bill  was  dismissed,  this  not  being  the  case  of  a  double  demand 
for  one  duty,  but  a  case  in  which  there  may  be  two  liabilities;  and  a 
mere  pretext  of  conflicting  claims  will  not  support  a  bill  of  interpleader; 
the  court  is  bound  to  see  that  there  is  a  question  to  be  tried.  Here  the 
transaction  created  a  debt  from  the  bank  to  Catherine,  in  consequence  of 
the  mode  of  dealing  adopted  by  the  bank ;  they  were  not  at  liberty  to 
resist  her  demand,  or  to  treat  the  case  as  one  of  interpleader,  because 
John's  representative,  who  made  the  last  deposit,  and  took  the  new  re- 
ceipt, chose  to  rescind  the  whole  transaction.  It  is  quite  consistent  with 
this  view,  that  John's  representative  may  still  be  able  to  recover  against 
the  bank ;  but  it  is  their  own  fault,  if  they  created  a  new  liability  in 
themselves,  without  obtaining  a  sufficient  discharge  from  the  orignal  title 
to  the  money  in  their  hands. (y\ 

The  bank,  in  the  above  case,  applied  for  the  bill  of  interpleader ;  but 
it  was  pointed  out,  by  the  court,  that  in  so  doing,  they  asked  it  to  destroy 
their  own  mode  of  dealing :  for,  if  the  cancellation  of  the  old  receipt, 
and  the  issuing  of  the  new  receipt,  did  not  create  a  liability  to  the  person 
named  on  the  new  receipt,  the  bankers'  system  of  deposit  receipts  was 
defective. 


CHAPTER   VI.  [*138] 

DEPOSITS    OP   SECURITIES. 

We  will  next  trace  the  rules  of  law  which  regulate  the  obligations 
and  rights  of  bankers,  with  respect  to  bills  of  exchange,  and  other 
securities,  deposited  with  them  by  their  customers  and  others.  Questions 
of  this  nature  commonly  arise  between  the  customer,  or  other  depositor, 
on  the  one  hand,  and  the  assignees  of  the  bankers,  upon  their  bankruptcy, 
on  the  other. 

Deposits  for  specified  Purposes. — The  primary  or  general  rule  is,  that 
when  a  banker  is  employed  as  an  agent,  with  whom  undue  bills  are 
deposited  by  the  customer,  in  order  that  the  banker  may  receive  the 
proceeds,  when  the  bills  become  due,  or  for  any  other  specific  purpose,(a) 
and  the  banker  becomes  bankrupt,  having  the  bills,  intrusted  to  him, 
remaining  in  specie  in  his  hands,  they  continue  the  property  of  the 
customer,  and  do  not  pass  to  the  assignees,  and  he  may  reclaim  them  in 
specie  from  the  assignees. 

But,  on  the  other  hand,  if  bills  of  exchange  are  remitted  to  the 
banker,  on  the  general  account,  between  him  and  the  customer,  and  are 
not  distinguished  from  the  cash  items  of  the  account,  they  cannot  be 
reclaimed  by  the  customer  from  the  assignees.     In  other  words,  if  the 

(y)  Cochrane  v.  O'Brien,  2  Jo.  &  L.  388,  per  Sugden,  C,  Irel. 
(a)  Belcher  v.  Campbell,  8  Q.  B.  11. 


120  i.KANT    OS    THE    LAW    vV    BANKING. 

relation  of  principal  :m<l  agent  was  the  relation  of  the  customer  and  the 
banker,  with  respect  to  the  bills  at  the  time  of  the  latter*s  bankruptcy, 
the  customer  may  recover  in  trover  from  the  assignees;  if  the  relation 
had  passed  into  that  of  debtor  and  creditor  at  the  time  of  the  bankruptcy, 

then  the  customer  *has  no  such  right  of  action  against  the  at 
L    °l  J  aees,(&)  although  the  customer  might,  of  course,  have  sued  the 
banker,  for  the  amount  of  the  bills,  as  soon  as  they  were  entered  as  cash 
to  the-  customer's  credit,  and  the  books  of  the  banker  would  have  been 
evidence  against  him  on  this  point. 

Thi>  general  rule,  that  bills  deposited  or  remitted,  for  the  purpose  of 
the  banker's  receiving  the  proceeds  when  due,  continue  the  property  of 
the  customer,  if,  at  the  time  of  the  bankruptcy,  they  remain  in  specie  in 
the  hands  of  the  banker,  will  be  applied  in  all  cases,  where  there  is  no 
bargain  between  the  customer  and  the  banker,  that,  as  soon  as  the  bills 
reached  the  banker,  the  property  in  them  should  be  changed]  and  such 
bargain  cannot  be  inferred,  from  circumstances  which  fail  to  show  any 
consideration  for  the  customer's  assent,  as  it  would  be  unreasonable  in 
the  banker  to  ask,  and  imprudent  in  the  customer  to  accede,  to  such 
terms,  in  the  absence  of  a  consideration. 

In  one  ease,  (which  has  been  fully  confirmed,)  the  course  of  dealing 
between  the  customer  and  the  bank,  and  the  usage  of  the  banking  trade 
throughout  the  county  (of  Lancaster,)  was  shown  to  be  in  accordance 
with  the  following  tacts: — 

The  account,  in  the  case  in  question,  was  kept  in  this  form  in  the 
paas  book,  or  banking  1 k. 

A.  B.  [the  customer,)  in  account  with  ('.  1».  (the  banker.) 


Dr. 

Or. 

L821. 

e  s.  d. 

1821. 

C  8.  '/. 

July 4.— To  Hank. 

80  0  0 

July  1. — 15y  Balance, 

1,300  0  0 

«     5. — To  draft, 

LOO  0  0 

«      2.— By  Bills, 

75T)  0  0 

_        '■■  At  the  end  of  every  half-year,  an  account  was  sent  in  to  the 
-I  customer  from  the  banker.     In  the  account  of  Christmas,  1821, 

and  also  in  the  pass-1 k,  a  bill  for  689?.   I'.**.,  (one  of  those  in  question, 

in  an  action  of  trover,  brought  by  the  customer,  against  the  assignees  of 
the  bankrupt  banker.)  was  included,  being  one  of  several  bills,  paid  in 
i,n  the  10th  December,  1821,  and  it  formed  part  of  the  cash  balance  of 
911/.  -••  •"''/.,  therein  Mated  to  be  due  to  the  customer.     When   the 

mens  paid  bills  into  the  bank,  the  above  usage  was,  that  (provided 
the  banker  approved  of  the  bills,)  they  were  never  written  short,  but 

ent'  red  on  On  day  they  wen  paid  in,  both  in  the  pass-1 k,  and  in  the 

books  of  the  bank,  to  the  credit  of  the  customer,  in  the  form  above 

i  ;   and  after  8UCD  entry,  the  customer  was  at  liberty  to  draw  to  the 

full  amount  appearing  to  hi-  credit,  by  cheques  on  the  bank.     Bills 

{/,)  Be    I'.-,  parte  OureeU,  Ambler,  237  j  Kx  parte  Sarjeant,  1  Rose,  163,  which 

of  the  above  role  of  law  to  the  Beveral  t  icts  of  those  cases.     The 

i   tablished  by  Scott  \.  Barman,  Willc.-.  400;  Bolton  v.  Puller,  1  B. 

'■  M      22;  confirmed  in  Ex  parte  Atkins,  3  M. 

I  K  103. 


DEPOSITS    OF    SECURITIES.  127 

disapproved  of  were  not  so  entered,  but  were  sometimes  returned,  some- 
times deposited  till  due.  All  bills  so  entered,  whether  made  specially 
payable  to  the  customer,  or  not,  were  indorsed  by  him,  or  if,  for  any 
private  reasons,  lie  did  not  wish  his  name  to  appear  on  the  bills,  a  letter 
was  given  to  the  bank,  acknowledging  himself  to  be  equally  liable,  as  if 
he  had  indorsed.  An  interest  account  was  kept,  not  in  the  pass-book, 
but  in  the  books  of  the  bank,  in  which  the  customer  was  debited  with 
interest,  on  each  cash  payment  to  him,  from  the  date  of  the  payment; 
and  on  each  payment  in  bills,  from  the  period  when  the  bills  were  due 
and  paid,  and,  on  the  other  hand,  he  had  credit  for  interest,  from  the 
date  of  each  cash  payment  by  him,  and  from  the  period  when  each  bill, 
paid  in  by  him,  became  due,  and  was  paid.  As  the  accounts  were 
balanced  half-yearly,  if  a  bill  was  paid  in,  which  did  not  become  due 
before  the  end  of  the  half-year,  the  customer  was  debited  with  the 
interest  up  to  the  time  when  the  bill  was  due.  The  balance  only  of  the 
interest  was  entered  in  the  pass-book,  and  this  was  the  usual  mode  of 
keeping  an  interest  account.  If  only  the  undue  bills  paid  in  by  the 
^customer  were  taken  out  of  his  account,  in  this  case,  as  made  r^-1^-1-1 
up  to  the  31st  December,  1821,  the  customer's  account  would,  L  J 
at  that  date,  appear  to  be  overdrawn  ;  but  some  of  the  payments  made, 
by  the  banker  to  the  customer,  were  made  in  bills  payable  at  future  times, 
and  some  of  them  were  also  undue  on  31st  December,  1821,  and  if  all 
the  undue  bills,  on  both  sides,  had  been  taken  out  of  the  account,  the 
customer  would  have  been  made  creditor,  on  that  account. 

At  the  period  of  the  bankruptcy,  the  cash  balance  was  in  favour  of  the 
customer,  exclusive  of  the  bills  in  question.  It  was  proved  to  be  the 
constant  usage,  and  course  of  dealing,  of  this  bank  and  of  others  in  the 
•county  of  Lancaster,  to  use  bills,  so  paid  in,  by  paying  them  away  to 
their  customers  as  they  thought  fit. 

No  direct  proof  was  given  that  the  customer,  in  this  case,  was  acquainted 
with  this  practice,  and  the  customer  never  received  any  thing,  in  this 
case,  from  the  banker  but  cash,  notes  and  bills,  drawn  by  the  banker 
upon  his  London  agents,  (c) 

On  these  facts  and  the  usage  above  stated,  it  was  contended,  that  a 
bargain  or  contract  between  the  customer  and  banker  was  to  be  inferred, 
to  the  effect  that  bills  so  deposited  by  the  former  were  to  become  the 
property  of  the  banker,  upon  reaching  his  hands.  But  the  court  con- 
sidered that,  though  it  appeared  to  be  the  practice  to  carry  the  amount 
of  the  bills  to  the  cash  column  of  the  account,  the  bills  were  entered,  not 
as  cash,  but  as  bills, (d\  and  that,  although  the  amount  was  so  carried  to 
the  cash  column,  it  did  not  follow  *that  the  customer  assented  to  p^  ^9-. 
their  being  considered  as  cash.     That  merely  amounted  to  an  L       "J 

(c)  Thompson  v.  Giles,  2  B.  &  C.  422.  The  usage  of  bankers  was  again  stated 
to  prevail  in  Lancashire  to  the  above  effect,  in  the  case  of  Ex  parte  Arniitstead,  in 
re  Dilworth  &  Co.,  bankers  in  Lancaster;  cor.  Ld.  Lyndhurst,  C,  1827,  1828,  re- 
ported 2  Gly.  &  J.  319. 

(d)  Thompson  v.  Giles,  2  B.  &  C.  431,  432.  Even  if  they  had  been  entered  as 
cash,  that  would  have  admitted  of  explanation ;  Giles  v.  Perkins,  9  East,  12  ;  and 
the  customer,  even  in  that  case,  might  be  shown  to  be  entitled  to  the  bills.  Ex 
parte  Sarjeant,  1  Rose,  153,  per  Bayley,  J.,  2  B.  &  C.  430. 

January,  1857. — 10 


128  GRANI    OS    THE    LAW    OF    BANKING. 

undertaking  on  the  part  of  the  bank  to  answer  cheques  in  advance,  to 
the  amount  of  the  bills  so  entered.  By  indorsing  the  bill.-  paid  in,  or 
hv  _'i\  iiiLr  :i  guarantee,  when  he  did  not  choose  to  indorse,  the  customer 
might  enable  the  hanker  to  negotiate  tin-  hills,  and,  in  such  case,  a  bond 
bolder  might  hare  aright  t<>  retain  them.  But  the  banker  could 
only  )>••  justified  in  negotiating  them,  when  that  was  rendered  a  reason- 
able course,  by  the  -tut.'  of  the  customer's  account.  The  custom  or  usage 
of  banker-  in  Lancashire  was  stated  to  be,  it  will  be  observed,  to  use 
bills  paid  in  by  their  customers;  but  it  was  not  stated  to  be  the  usage 
that  the  bankers  should  so  nse  the  bills,  as  their  own,  without  reference 
r.,  tin  condition  of  tin  customer's  account. 

On  the  whole  of  the  ease,  it  was  concluded,  that  there  was  no  founda- 
tion lor  supposing  a  bargain  to  have  been  made,  enabling  the  banker  to 
as  his  own.  bill-  deposited  with  him;(</)  and  the  customer  recovered 
ills  from  the  assigneefi 
This  decision,  it  will  be  observed,  is  in  accordance  with  the  general 
n  : — if  a  customer  put  bills  into  his  banker's  hands,  although  that 
him  a  right  to  expect  that  his  cheques  will  be  honoured  to  the 
amount  of  the  bills  paid  in;    still  they  remain  his  property,  subject  to 
any  lien  the  banker  may  have  on  them,  to  the  extent  of  his  advances. (V) 
Ordt  r  and  Disposition. — Hills  in  such  circumstances  are  not  in  the 
i  rder  and  disposition  of  the  banker,  within  the  Bankrupt  Laws;  for  a 
hanker,  in  this  relation  to  his  customer,  is  a  factor  for  money,  within 
the  m<  aning  of  the  exception  of  factor  in  those  laws;(/)  and  it  is  well 
known  *that  bankers  receive  bills  as  factors,  or  agents,  to  get 
I         J  payment  of  them  when  due.(/) 

EnU  ring  Bills  as  Cash. — The  entry  as  cash  in  the  banker's  books  of 

BUoh  bills,  would  not,  of  itself,  change  the  property;^)  for  a  banker's 

hook.-  cannot  be  evidence  for  him.  though  tiny  may  lie  against  him  ;  and 

tie   assent  of  the  customer  to  the  bills  being  considered  as  cash,  must  lie 

proved  in  -ucli  ease  ;  the  onus  of  proving  it  being  on  the  banker  ;(/<)  also, 

it  i-  hard  to  -appose  that,  by  entering  the  full  amount  in  the  cash  column 

of  the  account,  the  banker  intended  to  debit  himself  presently,  with  the 

whole  sum,  to  be  received  in  future,  on  the  bills.     In  order  to  change 

tie  property,  it  must  be  shown  that  the  banker  bought  the  bills,  or  what 

i-  in  general  the  same  thin-,  discounted  them;  then  the  customer  might 

immediately  sued  the  banker  for  the  price  which  the  banker  had 

for  the  hill-,  hut    -till    retained  in  his  hands;   and  if  the 

merdid  not  indorse  the  hills,  and  they  were  afterwards  dishonoured, 

the  banker  would  have  no  remedy  against  him.(t) 

I     the]        I k  in  the  above  ease,  it  will  be  observed,  the  bills  were 

(rf,   -  •/;.  precedi 

\e)  Per  Holroyd,  J.,  2  I'.,  h  0.  431,  433. 

(/)   J  B.  kC.  431,  l  ::;.  per  Lord  Kldon,  C,  1  Rose,  239,  253;  Bryson  v.  Wylie, 

Bullet,  J..  ■  a. 

(g)  i.i.i-  t.  ivrkin-.  9  Bast,  L2  j  Bughes  v.  Spooner,  per  Best,  J.,  at  Nisi  Prins, 
confirmed,  per  Holroyd,  J.,  id.  431. 
K\  parte  Sarjeant,  l  Boee,  163,  per  Ld.  Eldon,  C. ;  see  2  B.  &  C.  430,  433. 
(i)  Per  Holroyd,  J.,  J  B.  &  <'.  I 


DEPOSITS    OP    SECURITIES.  129 

entered  at  the  full  amount,  which  does  not  tend  to  show  that  they  were 
discounted ;  nor  do  the  entries  in  the  interest  account  tend  that  way.  If 
it  had  been  intended  that  the  bills  should  become  the  property  of  the 
banker,  they  would  have  been  entered  as  cash,  deducting  the  discount. 

Property  in  Bills  not  due. — It  will  be  observed,  to  follow  as  a  conse- 
quence of  the  rule  above  stated,  tbat  when  the  property  in  bills  not  due, 
paid  in  to  a  banker's  remains  in  *the  customer,  if,  by  any  acci-  r*i44-i 
dent,  they  are  destroyed,  without  the  default  of  the  banker,  the  L  -< 
loss  does  not  fall  upon  him,  but  upon  the  customer. (?') 

This,  and  all  other  consequences  of  the  rule  follow,  and  the  rule  itself 
prevails  equally,  where  the  bills  are  deposited  for  any  other  specific  pur- 
pose, as  well  as  that  of  receiving  the  amount  when  due.(£) 

There  is  no  doubt,  however,  that  bills  may  he  paid  in,  under  circum- 
stances, furnishing  evidence  of  a  transfer  of  the  property  in  them,  from 
the  customer  to  the  banker ;  that  is  a  question  of  fact,  to  be  determined 
by  a  jury,  upon  the  whole  of  the  circumstances  in  evidence. (i) 

Liability  of  Bankers  criminally. — Finally,  it  may  be  observed,  on 
the  above  discussed  case,  that  a  pretty  clear  opinion  was  expressed,  by 
two  out  of  three  learned  judges,  who  decided  it,  to  the  effect,  that  a 
banker,  (notwithstanding  tbat  it  was  the  usage  of  the  county  of  Lancaster 
amongst  bankers,)  who  negotiated  bills  intrusted  to  his  care,  in  the 
manner  stated,  knowing  himself  to  be  on  the  eve  of  bankruptcy,  would 
run  great  hazard  of  incurring  the  penalties  enacted  in  52  Geo.  III.  0.  63, 
a  statute  passed  to  prevent  the  embezzlement  of  securities  for  money,  &c, 
deposited  for  safe  custody,  or  for  any  special  purpose,  with  bankers,  &o.(l\ 
That  statute  is  now  repealed ;  but  provisions  are  substituted  by  7  &  8 
Geo.  IV.  c.  29,  ss.  49,. 50,  by  which  bankers  may,  in  certain  circum- 
stances, render  themselves  liable  to  transportation,  by  misapplying  secu- 
rities intrusted  to  them. 

This  enactment(?)i)  is  as  follows : — 

"  And  for  the  punishment  of  agents  intrusted  with  property,  be  it 
enacted :  that  if  any  money,  or  security  for  the  ^payment  of  p-^g-i 
money,  shall  be  intrusted  to  any  banker,  merchant,  broker,  L 
attorney,  or  other  agent,  with  any  direction  in  writing,  to  apply  such 
money,  or  any  part  thereof,  or  the  proceeds,  or  any  part  of  the  proceeds, 
of  such  security,  for  any  purpose  specified  in  such  direction,(n)  and  he 
shall,  in  violation  of  good  faith,  and  contrary  to  the  purpose  so  specified, 
in  anywise  convert  to  his  own  use  or  benefit  such  money,  security,  or 
proceeds,  or  any  part  thereof  respectively,  every  such  offender  shall  be 
guilty  of  a  misdemeanour,  and  being  convicted  thereof,  shall  be  liable, 
at  the  discretion  of  the  court,  to  be  transported  beyond  the  seas  for  any 

(i)  Per  Best,  J.,  2  B.  &  C.  433.  A  similar  opinion  by  the  Judicial  Committee  of 
P.  C,  Young  y.  Bank  of  Bengal,  1  Deac.  681. 

(k)  Belcher  v.  Campbell,  8  Q.  B.  11. 

(1)  See  2  B.  &  C.  427,  434. 

(to)  1  &  8  Geo.  IV.  c.  29,  s.  49. 

(n)  Both  in  the  case  of  money  and  of  a  security  for  money,  there  must  be  a 
written  direction,  and  it  must  be  so  alleged  in  the  indictment.  Reg.  v.  Golde,  2 
Moo.  &  R.  425. 


[30         OBANI  OH  THE  LAW  i'F  RANKING. 

rmn  not  exceeding  fourteen  years,  nor  lessfo)  than  seven  years,  or  to 
suffer  Buch  other  punishment,  by  fine  or  imprisonment,  or  by  both,  as 
the  oonrl  shall  award." 

••  Ami  it'  any  chattel,  or  valuable  Becnrity,  <>r  any  power  of  attorney, 
tor  the  sale  or  transfer  of  any  Bhare,  or  interest,  in  any  public  stock,  or 
fdnd,  whether  of  this  THngdom,(p)  or  of  Great  Britain,  or  of  Ireland,  or 
of  any  foreign  state,  or  in  any  fund  of  any  body  corporate,  company,  or 
society,  shall  be  intrusted  to  any  banker,  merchant,  broker,  attorney,  or 
other  agent,  for  safe  custody,  or  for  any  special  purpose,  without  any 
authority  to  Bell,  negotiate,  transfer,  or  pledge,  and  he  shall,  in  violation 
of  g 1  faith,  and  contrary  to  the  object  and  purpose  for  which  such 

chattel,  Becnrity,  or  power  of  attorney,  Bhall  have  been  intrusted  to  him, 
sell,  negotiate,  transfer,  pledge,  or  in  any  manner  convert,  to  his  own 
use,  or  benefit,  such  chattel  or  security,  or  the  proceeds  of  the  same,  or 
any  part  thereof,  or  the  share,  or  interest,  in  the  stock,  or  fund,  to  which 
r*1J.P"l  Su<-M  power  of  attorney  shall  *rclate,  or  any  part  thereof,  every 
L  -I  such  offender  shall  be  guilty  of  a  misdemeanour,  and,  being  con- 
victed thereof,  shall  be  liable,  at  the  discretion  of  the  court,  to  any  of 
the  punishments  which  the  court  may  award,  as  hereinbefore  last 
mentioned." 

Now,  it  will  be  observed,  that,  although  in  the  first  branch  of  the 
section,  a  written  direction  is  required,  as  an  essential,  to  render  the 
party  liable  to  the  punishments  therein  mentioned,  there  is  no  such 
requirement  in  the  second  branch  of  it,  which  is  nearly  a  re-enactment, 
in  fewer  and  more  comprehensive  words,  of  the  first  section  of  the  statute 
52  Geo.  III.  e.  63,  already  referred  to,  except  that  it  does  not,  as  that 
statute  does,  make  it  an  ingredient  in  the  offence,  that  it  shall  lie  com- 
mittal. "  with  intent  to  defraud  the  owner  or  owners  of  any  such  instru- 
ment or  security,  or  the  person  or  persons  depositing  the  same,"  &c.  : 
so  that,  to  the  latter  branch  of  the  clause,  the  expression  of  opinion, 
mentioned  above/5)  seems  to  apply,  at  present ;  and  it  may,  therefore, 
be  proper  to  point  out  tie'  hazard  which  bankers  incur,  who  so  negotiate 
hill-  deposited  with  them,  as  in  that  case:  also,  it  is  clear,  that  in  case 
of  -mh  negotiation  being  held  to  be,  in  itself,  a  misdemeanour,  under  the 
last-mentioned  branch  of  the  clause, — that  is,  where  there  is  no 
written  direction, — it  would  be  no  excuse  to  show,  that  what  the  defend- 
in  t-  did,  was  according  to  the  usage  of  bankers,  in  the  district,  or  county, 
in  which  they  carried  On  business.  Nor  would  any  other  excuse  avail, 
unless  they  could  bring  the  case  within  the  meaning  of  the  subjoined 
provisoes,  "r  eith<  r  of  them,  as  follows: — 

■  Provided  always/r)  that  nothing  hereinbefore  contained,  relating  to 

all  affect  any  trustei  .  in  Or  Under  any  instrument  whatever,  or 

any  mortgage    of  any  property,  real  or  personal,  in  respect  of  any  act, 

EL  v.  White,  I  Car.  A  ■■,  evidence.     Transportation  for  less 

than  fi  n  abolished,  16  A  ]  7  \  i<  i   i 

.  the  anion  with  Scotland  there  is  no  longer  a  kingdom  of  Eng- 
land.    Per  Wile.  -  \.  Walker,  i  W.  Bla.  287  ;  -<,  l  Bla.  0.  96;  1  A.  &  E. 

•     I 
'  •   p.  L29.  :  &  8  Geo.  IV.  c.  29,  s.  50. 


DEPOSITS    OF    SECURITIES.  131 

done  by  *such  trustee  or  mortgagee,  in  relation  to  the  property  m,., 
comprised  in,  or  affected  by,  any  such  trust  or  mortgage ;  nor  «-  J 
shall  restrain  any  banker,  merchant,  broker,  attorney,  or  other  agent, 
from  receiving  any  money  which  shall  be,  or  become,  actually  due  or 
payable  upon  or  by  virtue  of  any  valuable  security,  according  to  the 
tenor  and  effect  thereof,  in  such  manner  as  he  might  have  done  if  this 
act  had  not  been  passed  ;(s\  nor  from  selling,  transferring,  or  otherwise 
disposing  of,  any  securities  or  effects  in  his  possession,  upon  which  he 
shall  have  any  lien,  claim,  or  demand,  entitling  him  by  law  so  to  do, 
unless  such  sale,  transfer,  or  other  disposal,  shall  extend  to  a  greater 
number  or  part  of  such  securities  or  effects  than  shall  be  requisite  for 
satisfying  such  lien,  claim  or  demand." 

It  is  further  provided,  M  as  follows  : — 

"  Provided  always,  that  nothing  in  this  act  contained,  nor  any  pro- 
ceeding, conviction  or  judgment,  to  be  had  or  taken  thereupon  against 
any  banker,  merchant,  broker,  factor,  attorney,  or  other  agent  as  afore- 
said, shall  prevent,  lessen,  or  impeach  any  remedy  at  law  or  in  equity, 
which  any  party,  aggrieved  by  any  such  offence,  might  or  would  have 
had  if  this  act  had  not  been  passed ;  but,  nevertheless,  the  conviction  of 
any  such  offender  shall  not  be  received  in  evidence,  in  any  action  at  law 
or  suit  in  equity,  against  him ;  and  no  banker,  merchant,  broker,  factor, 
or  other  agent  as  aforesaid,  shall  be  liable  to  be  convicted  by  any  evidence 
whatever  as  an  offender  against  this  act,  in  respect  of  any  act  done  by 
him,  if  he  shall,  at  any  time  previously  to  his  being  indicted  for  such 
offence,  have  disclosed  such  act  on  oath,  in  consequence  of  any  com- 
pulsory process  of  any  court  of  law  or  equity,  in  any  action,  suit  or  pro- 
ceeding, which  shall  have  been  bona  fide  instituted  by  any  party  aggrieved, 
or  if  he  shall  have  disclosed  the  same  in  any  *examination  or  r^-ijon 
deposition  before  any  commissioners  of  bankrupt. "(t£)  L         -• 

In  a  case  of  great  importance  and  notoriety,  in  which  certain  bankers, 
Strahan,  Paul,  and  Bates,  had  fraudulently  disposed  of  a  number  of 
Danish  bonds,  which  had  been  deposited  with  them,  for  safe  custody, 
and  for  the  purpose  of  receiving  the  dividends  upon  them,  for  the  use  of 
their  customer,  who  had  deposited  them,  it  was  attempted  to  take  advan- 
tage of  this  proviso,  in  the  above  section,  by  the  bankers  becoming 
bankrupts,  and,  after  they  had  been  arrested  and  imprisoned  on  the 
criminal  charge,  making  a  voluntary  declaration,  in  the  Court  of  Bank- 
ruptcy, as  to  the  misappropriation  of  the  securities ;  but  the  attempt 
failed;  a  conviction  was  obtained,  and  sentence  passed. 

The  prisoners,  William  Strahan,  Sir  John  Dean  Paul,  baronet,  and 
Robert  Makin  Bates,  were  indicted  at  the  Central  Criminal  Court,(w)  on 
the  statute  7  &  8  Geo.  IV.  c.  29,  s.  49,  for  that  they,  being  bankers  and 
agents  to  John  Griffith,  clerk,  and  being  intrusted  by  him  with  certain 

(s)  See  Thompson  v.  Giles,  2  B.  &  C.  422,  and  7  &  8  Geo.  IV.  c.  29,  s.  1. 

(t)  7  &  8  Geo.  IV.  c.  29,  s.  52. 

(«)  7  &  8  Geo.  IV.  c.  29,  s.  52  ;  and  see  5  &  6  Vict.  c.  39,  s.  6 ;  and  the  case  of" 
Eeg.  v.  Strahan,  Paul  and  Bates,  Centr.  Crim.  Crt.  1855. 

(m)  The  trial  took  place  Oct.  26  and  Oct.  27,  1855,  cor.  Alderson,  B..  Martin  B., 
Willes,  J.     Sessions  Paper,  1854-1855,  (Moon,  Mayor,)  p.  695. 


|32  LANT    OS    THE    LAW    OF    BANKING. 

bonds  (set  out  in  the  indictment)  for  safe  custody,  without  any  authority 
to  pledge  <>r  make  away  with  them,  in  violation  of  good  faith,  did  sell 
and  convert  the  same  to  their  own  nse  and  benefit. 

There  were  other  counts  for  negotiating,  transferring,  and  pledging 
the  name,  and  for  a  conspiracy,  respectively. 

The  prisoners  having  pleaded  not  guilty,  application  was  made  on  their 
behalf  for  permission  to  plead  double,  by  adding  a  special  plea,  alleging 
the  met  of  the  prisoners  having  made  the  disclosure  above  mentioned, 
with  a  view  of  availing  themselves  of  the  52nd  section  of  the  statute 
above  Bet  outj  but  the  application  being  considered  as  resting  on  no 
authority,  and  made  only  to  the  discretion  of  the  court,  *was 
I  -I  refused;   and,  as  evidence  was  afterwards  admitted,  for  the  pur- 

pose of  bringing  before  the  court  the  steps  which  had  been  taken,  by 
the  prisoners,  in  this  matter,  it  may  perhaps  be  now  regarded  as  settled 
that,  in  future,  any  banker,  in  like  circumstances,  may  avail  himself  of 
t  defence  similar  to  this,  to  the  criminal  charge,  under  Not  guilty,  if  at 
all ;  and  that  it  is  not  necessary  to  plead  it  specially. 

It  was  proved  that  the  prisoners  had  sold  certain  Danish  bonds,  and 
transferred  others  belonging  to  Dr.  Griffith,  a  customer,  who  had  depo- 
Bited  them  with  the  prisoners,  as  his  bankers  and  agents,  for  safe  custody, 
and  in  order  that  they  might  obtain,  for  him,  the  dividends,  as  they  fell 
due,  and  that  he  had  never  given  them  any  authority  to  pawn  or  sell  the 
same,  or  any  part  of  them,  and  that  he  had  never  overdrawn  his  account 
with  them. 

Por  the  defence  it  was  proved,  that  on  the  17th  June,  1855,  one 

Montague  .John  Tatham  filed  a  petition  for  adjudication,  in  bankruptcy, 

against  the  prisoners  ;  that  they  were  adjudged  bankrupts  the  same  day, 

and  surrendered  on  the  12th  ;  that  tiny  made  a  statement  concerning 

the  disposal  of  the  securities  in  question,  without  examination,  and  not 

in  pursuance  of  any  order  of  the  sitting  commissioner;  and  that  they 

made  this  declaration,  for  the  general  purpose  of  assisting  the  creditors, 

and  for  the  special   purpose  of  making  a  disclosure  under  the  above- 

iih  ntioned  statute;   that  they  were  then  questioned,  by  the  solicitor  for 

the  fiat,  as  to  the  truth  of  the  statement,  and  each  answered  (affirming 

;:l,    ••  v.-.."     The  commissioner  had,  previously  to  this,  refused  an 

application  made  by  counsel,  on  behalf  of  the  prisoners,  to  be  permitted 

unine  them,  with  reference  to  the  statement,  as  to  the  disposal  of 

the  securities,  saying,  "  If  any  creditor  applies  for  the  bankrupts  to  be 

examined,  he   can  do  so;   hut,  upon   the   hankrupt's  own  application,  I 

it."' 

Tin'    prisoner!   were  convicted    on    the  first  and  third  counts,  and 

need  to  fourteen  years'  transportation. 

prien-i  ibility  of  Banker*  in  Equity. — The  following  cases  show 

J  how  far  bankers  are  liable,  in  equity,  as  to  deposits. 

A  banker  receives  a  deposit  of  a  parcel,  sealed,  containing  certain 

American  loan  certificates,  of  the  alleged  value  of  lo,ii(io/.,  for  the  pur- 

ife  custody,  from  a  jn  rson,  who,  goon  after,  is  imprisoned  under 

civil  pp..-,..,  being  a  partner  in  a  trading  firm,  which  had  failed:  he 

demand  the  deposit;  the  hanker  refuses  to  re-delivcr  it  under 


DEPOSITS    OF    SECURITIES.  133 

the  circumstances,  and  is  then  served  with  attachments  out  of  the  Mayor's 
Court  by  the  creditors  of  the  trading  firm.  The  banker  is  subsequently 
sued  in  trover  by  the  depositor,  and  held  to  bail.  It  was  considered 
that  he  was  entitled  to  relief  in  equity,  upon  a  bill  of  interpleader,  but 
that  he  need  not  have  come  there,  as  at  law  he  would  have  been  dis- 
charged— (at  that  time) — on  common  bail,  upon  bringing  the  deposit 
into  court ;  and  proceedings  in  the  action  would  have  been  staid,  till  the 
attachments  were  disposed  of,  by  the  depositor,  in  the  name  of  the 
banker ;  Lord  Loughborough,  C,  saying,  it  would  be  a  very  rash  act  in 
any  one  to  pay  money  to  a  man,  subject  to  the  bankrupt  laws,  who  was 
in  prison  at  the  time ;  that  he  thought  the  banker  had  a  right  of  action 
against  the  depositor,  on  the  ground  of  the  holding  him  to  bail; (a)  that 
it  being  known  that  a  person  lying  two  months  in  prison  is  subject  to 
the  bankrupt  laws,  and,  therefore,  that  a  payment  made  in  the  meantime 
is  bad,  it  is  unjust  to  expect  the  bankers  to  trust  him,  and  take  upon 
themselves — without  a  consideration — the  risk  of  deciding  that  there  was 
no  foundation  for  his  arrest,  (x) 

In  a  subsequent  case,  arising  on  the  bankruptcy  of  another  firm,  of 
Lancaster  bankers,  in  which  also  the  custom  or  usage  of  banking  there 
was  proved  to  be,  substantially,  as  above  stated,  it  was  decided,  that, 
where  certain  short  bills  drawn  before,  but  not  payable  till  after,  the 
bankruptcy  took  *place,(y)  had  been  deposited  with  the  bankers,  p^-i 
and  by  them  negotiated  with  their  correspondents  in  London,  L  J 
before  the  bankruptcy,  the  proprietor  was  entitled  to  be  indemnified,  by 
the  London  bankers,  from  the  surplus  security  which  they  had  taken, 
from  the  Lancaster  bank  (being  title  deeds,)  after  satisfying  their  own 
lien  on  those  securities.  It  ought  to  be  stated  that  the  London  bankers 
had  given  credit,  to  the  Lancaster  bank,  for  the  amount  of  the  bills,  in 
reduction  of  their  claims  upon  the  Lancaster  bank ;  also  the  balance  of 
account,  between  the  customer,  who  was  owner  of  the  bills,  and  the 
Lancaster  bank,  had  always  been  in  his  favour,  (z) 

The  result  of  this  decision  is  to  show  that,  notwithstanding  the  usage, 
Dilworth  &  Co.,  the  bankers,  had  no  right  to  dispose  of  the  bills,  as  they 
did,  by  transmitting  them  to  the  London  bankers,  and  that  although 
bills  deposited,  in  like  circumstances,  had  been,  in  the  half-yearly 
accounts,  sent  to  the  customer,  since  the  commencement  of  his  account 
with  the  bank  in  1822,  considered  as  cash  without  objection  on  his  part, 
that  did  not  amount  to  a  permission  to  discount  or  negotiate.^) 

In  a  second  case,  arising  on  the  bankruptcy  of  the  same  firm  of  Dil- 
worth &  Co.,  of  Lancaster,  it  was  ruled,  that  a  customer  was  not  entitled 
to  recover  short  bills,  in  the  hands  of  his  bankers,  on  their  bankruptcy, 
where  the  habit  of  dealing  between  the  parties  was  such,  as  to  warrant 
an  inference,  that  they  mutually  considered  and  treated  such  bills  as 
cash.  The  bills  in  question  were  indorsed  by  the  customer  generally, 
and  paid  into  the  bank,  and  indorsed  by  the  bankers  to  their  London  cor- 

(z)  Langston  v.  Boylston,  2  Ves.  jun.  101,  109. 

(y)  See  Mont.  &  M'A.  108,  n.  Date  of  bankruptcy,  Feb.  13,  1826.  1  Dea.  &  G. 
411 ;  as  to  usage,  see  sup.  140-142. 

(z)  Ex  parte  Armitstead,  2  Gly.  &  J.  371,  379. 


j     .  G IB  ANT    OX    THE    LAW    OF    BANKING. 

respondent  These  bilk  were  drawn  previous  to,  but  were  not  due  until 
after,  the  bankruptcy.^/) 

-  Short   BUlt —  Entt  ring  short —  Liability  of  Banker. — The 

l  J  terms  "short  bills/' sod  "entering  bills  short,"  are  very  fre- 
.(ii.  nth-  met  with,  in  eases  relating  t.>  the  law  of  bankers,  being  technical 
expressions,  osed  amongst  persons  engaged  in  banking:  it  is  desirable, 
therefore,  before  proceeding  farther,  t.>  state  the  meaning  that  is  attached 
to  the  words. 

When,  up.  .n  the  receipt  from  a  customer,  of  an  undue  bill,  the  banker 
not  carry  the  amount  direi  try  i"  the  former's  credit,  as  for  a  pay- 
in.  nt  .4'  bo  much  cash,  into  his  account,  but  notes  down  the  receipt  of 
the  bill,  in  the  customer's  account,  with  its  amount,  and  the  time  when 
due,  in  a  previous  column  of  the  same  page,  lie  (the  banker)  is  said  to 
••  enter  thuse  bills  short. "(A)  Ami  the  bills,  when  so  entered,  are  coni- 
m. nily  said  to  be  "  short  bills. "(c)  Though,  whether  they  will  be  con- 
si.  1. -re.  1  si.  by  the  courts,  does  not  depend  upon  the  particular  mode  in 
which  they  are  entered,  but  upon  the  dealings  between  the  parties,  and 
tli.  circumstances.  Such  bills,  in  the  absence  of  special  agreement 
1'  tween  the  parties,  to  the  contrary,  or  habits  of  dealing,  from  which 
Buch  agreement  may  be  inferred,  are  considered  in  the  nature  of  a 
deposit ;  the  property  in  them  is  not  changed ;  on  the  bankruptcy  of  the 
banker,  with  them  in  his  hands,  they  may  be  recovered. (d) 

On  the  subject  of  short  bills,  it  may  be  proper  to  add,  to  what  fell  from 
the  court  in  the  Lancaster  cases,  respecting  the  hazard  which  a  banker 
run-,  win.  has  intrusted  to  him  any  valuable  security  for  safe  custody, 
or  t'nr  any  other  special  purpose,  without  authority  to  negotiate,  transfer, 
i.r  pledge,  and,  nevertheless,  in  violation  of  good  faith,  and  contrary  to 
.  |  ,-,  the  object  of  the  trust,  he  takes  upon  him  to  *transfer,  pledge, 
L  J  or  in  any  manner  convert  such  security:  that  a  banker,  appro- 
priating short  bills  to  his  own  purposes  and  use,  would  probably  be 
indictable,  for  embezzlement,  under  7  &  8  Geo.  IV.  c.  29,  s.  49;  at  all 
events,  a  banker,  who  has  pledged  a  short  bill  of  a  customer,  will  be 
refused  hi-  certificate  of  discharge  on  his  baukruptcy.(e) 

In  some  other  oases,  it  has  appeared  to  be  the  usage  of  some  country 
banking  houses,  to  enter  undue  hills,  that  are  deposited,  to  the  credit  of 
the  customer,  giving  him  either  cash  for  them,  or  liberty  t..  draw  for  the 
aiiniiiiit  opon  tic  bank,  the  customer  always  indorsing  the  bills.  The 
ce  of  I,,, n. inn  bankers  i-  t"  enter  a-  above  j'i-t  Btated.  The  differ- 
between  the  effeol  of  the  two  mi  di  -  i-  this:  the  London  banker,  if 
tie-  oustomer'e  account  be  overdrawn,  has  a  lien  on  the  bill  deposited 

En  re  Dilworth,  4c,   Mont.  A  M  A.  102;  see  also  Bx 

Benson,  in  re  DH worth,  4c,  l  Deac.  ,\  0    135,  and  Bee  thi  observations  on 

the  practice  of  tl  lire  bankers,  in  the  judgments  in  Thompson  v.  Giles,  2 

Giles  r.  Perkins,  »  East         13. 
re]  K\  parte  Pease,  i  Rose,  232,  per  Ld.  Bldon,  C. 

\d)  Bx  parte  Dumas,  1  Atk.  233  :  8.  «'..  2  Vi       •  n.  582  :  Zinck  v.  Walker,  2  W. 

t).  a  D.  O.  103  :  Jombart  v.  Woollett,  2  My.  a  0. 

-utrt.  4  De  ('<    k  S.  19  ;  and  see  1  Fonbl.  R.  84,  113. 


DEPOSITS    OF    SECURITIES.  135 

with  him,  though  not  indorsed.  The  country  banker,  who,  under  this 
practice,  always  takes  the  bill  indorsed,  has  not  only  a  lien  upon  it,  if 
the  customer's  account  be  overdrawn,  but  has  also  his  legal  remedy  upon 
the  bill  by  the  indorsement.  It  is  to  be  observed,  however,  that  under 
neither  system  does  any  lien  accrue  to  the  banker,  until  the  customer's 
account  be  overdrawn.  Moreover,  if,  at  the  time  of  the  country  banker's 
bankruptcy,  the  customer's  balance  be  in  his  favour,  he  has  a  right  to 
recover,  in  specie,  all  such  bills  of  his,  as  are  in  the  banker's  hands,(/)  or 
have  been  pledged  by  the  banker,  to  a  third  person. [g) 

With  respect,  however,  to  the  policy  of  depositing  bills,  indorsed  by 
the  party  depositing,  the  following  considerations  must  be  attended  to  : — 

Whether  a  bill  is  to  be  considered  as  intended  to  be  discounted  or  de- 
posited, does  not  depend  on  whether  it  is  indorsed,  but  on  the  question 
whether  it  was  the  intention  to  *make  an  absolute  transfer,  giving  ^-.  -A-, 
full  power  to  go  against  all  parties  to  the  bill ;  or  merely  to  enable  L  J 
the  person  with  whom  it  is  deposited,  to  receive  the  amount  from  the 
other  parties.  Indorsement,  however,  is  prima  facie  evidence  of  the 
former.  (/A 

The  clearly  settled  rule  is,  that,  if  indorsed  bills  are  deposited  with  a 
banker,  and  they  are  by  him  negotiated  to  a  third  person,  though  the 
purpose  for  which  they  are  deposited  be  ever  so  cruelly  disappointed,  by 
his  becoming  bankrupt,  the  original  owner,  who  deposited  or  remitted 
them  to  the  banker,  who  fails,  can  have  no  claim  to  recover  them  in 
trover  against  such  third  person  ;(i\  and,  moreover,  he  can  only  come  in 
as  general  creditor  of  the  bankers. (&) 

Lord  Eldon  more  than  once  observed,  when  sitting  in  bankruptcy,  than 
it  ought  to  be  generally  known,  that  if  bills  indorsed  are  remitted  to 
bankers,  they  may  dispose  of  them  effectually,  though  contrary  to  the 
faith  of  the  understanding  between  the  parties,  and  the  remitters  can 
only  come  in  as  general  creditors  on  the  bankruptcy.  (&) 

Permission  to  discount,  given  by  the  customer,  for  the  purpose  of  re- 
ducing the  balance,  when  the  banker  shall  be  in  advance,  is  a  circum- 
stance controlling  his  absolute  authority  over  the  indorsed  bills  of  his 
customer.  (£) 

It  is  to  be  remembered  also,  that,  as  on  the  one  hand,  writing  bills 
short,  is  only  evidence,(m)  to  be  rebutted  by  proof  of  the  intentions  of, 
or  actual  bargains  or  contracts  between,  the  customer  and  banker ;  so, 
on  the  other  hand,  the  circumstance  of  the  bills  not  having  been  written 
short,  amounts  to  nothing,  to  show  they  were  taken  as  cash,  "  unless 
there  be  a  concurrence  manifested  at  the  time,  or  to  be  *inferred,  r#i  55-1 
from  the  habits  of  dealing  between  the  parties,  that  they  were  to  L         J 

(/)  Giles  v.  Perkins,  9  East,  12,  14.  The  presumption  has  been  said  to  be  that 
bills  deposited  with  a  banker  are  short  bills.  Ex  parte  Annitstead,  2  Gly.  &  J. 
371 ;  see  1  Rose,  243,  254;  5  T.  R.  494. 

(g)  Collins  v.  Martin,  1  B.  &  P.  648. 

(A)  Ex  parte  Towgood,  19  Ves.  229. 

(i)  Per  Cur.,  Bolton  v.  Puller,  1  B.  &  P.  546.     Collins  v.  Martin,  id.  648. 

(k)  Per  Ld.  Eldon,  C.  ;  Ex  parte  Pease,  1  Rose,  238  ;  Ex  parte  Wakefield  Bank, 
id.  246  ;  see  Ex  parte  Bond,  1  M.  D.  &  D.  G.  15. 

(I)  Ex  parte  Leeds  Bank,  1  Rose,  254.  (m)  Ex  parte  Pease,  1  Rose,  239. 


13G         .KANT  ON  THE  LAW  OF  BANKING. 

be  considered  as  oa&h.'Yn)     ELenoe,  in  a  case  where  sueli  bills  were 

entered,  liills  and  ea-li  together,  in  the  running  account,  without  distinc- 
tion, iii  the  absence  of  evidence  to  show  aliunde  that  they  were  mutually 
considered  as  cash,  Lord  Bldon  appears  to  have  thought,  that  the  cus- 
tomer  was  entitled  to  the  bills,  ou  the  bankruptcy  of  the  banker,  (o) 

Again,  if  there  be  a  letter  accompanying  the  remittance  of  bills,  and 
giving  directions  as  to  how  they  shall  be  dealt  with,  that  is  evidence  of 
intention,  which  cannot  be  got  rid  of  by  the  subsequent  unauthorized 
aet  of  the  hanker  in  entering  the  hills  short  ;(  p\  for  the  books  of  a  banker 
not  communicated  to  those  dealing  with  him,  are  not  evidence  for 
him,  though  he  may  be  evidence  for  them.(;>) 

Bills  remitted  for  Sale,  dfce. — So,  whenever  liills  of  exchange  are  re- 
mitted for  sale,  and  the  proceeds  are  directed  to  be  applied  to  a  specific 
purpose,  the  property  in  the  bills  remains  in  the  remitter,  until  the  pur- 
pose, for  which  they  were  remitted,  is  satisfied  ;  and,  moreover,  the  value 
of  the  bills  maybe  recovered  in  indebitatus  assumpsit,  from  the  pur- 
chaser of  the  bills,  who  had  notice  of  the  purpose  for  which  they  were 
remitted,  and  of  the  misapplication  of  the  proceeds  by  the  agent.  The 
bills,  in  the  case  in  which  the  above  doctrine  was  recognized,  were  not 
indorsed,  (y) 

A  case  of  the  sale  of  bills,  by  a  factor,  is  precisely  the  same  in  prin- 
ciple, and  must  be  dependent  on  the  same  rules  of  law,  as  a  sale  of  a 
bill  by  a  banker ;  and  may,  therefore,  here  be  cited  in  illustration  of  the 
foregoing  Btatments,  and  as  elucidating  this  part  of  the  law  of  banking. 
r*i  ?p-i  A  foreign  merchant  remits  bills  to  his  factor,  in  London,  *with 
-I  directions  to  sell  them,  advising  him,  at  the  same  time,  of  his 
intention  to  draw  for  the  proceeds.  The  factor  receives  the  bills,  and 
Bells  them,  hut,  before  the  receipt  of  the  purchase-money,  becomes  bank- 
nipt,  and  dishonours  the  merchant's  drafts  for  the  amount  of  the  bills. 
The  sale  in  London,  of  foreign  hills  of  exchange,  usually  (the  report 
states  )  takes  place  on  foreign  post-days,  and  it  is  the  custom  of  merchants, 
not  to  pay  the  purchase-money,  until  the  foreign  post-day,  next  after  the 
day  of  sale.  In  this  ease  the  bills  were  remitted  on  the  21st  March,  on 
the  -vth  tiny  were  Bold,  and  the  price,  according  to  the  above  custom, 
would  have  been  payable  on  the  31st:  on  the  30th,  the  factor  Btopped 
payment  :  on  the  20th  April  following  the  fiat  issued.  Here  the  mer- 
chant, and  not  the  assignees  of  the  factor,  were  held  to  he  entitled  to  the 

proceeds  of  these  bills,  notwithstanding  the  bills  had  been  indorsed,  both 

by  the  principal  and  the  factor,  and  were  sold  by  the  factor  in  his  own 
name.  The  factor  did  not  receive  a  del  credere  commission,  nor  did  he 
take  upon  himself  any  liability,  in  case  of  nonpayment  of  the  purchase- 
money,  in  respect  of  such  bills,  but  was  accustomed,  on  such  sales,  to  in- 
form the  principal  of  the  names  of  the  purchasers,  (r) 

'■  r  I..].  Bldon,  C.  Bi  parte  Sarjeant,  l  Rose,  154. 

K\  parte  Sarjeant,  i  Rose,  L64,  commented  on  by  Bayley,  J.,  2  B.  &  C.  430. 
i .    ;    ■  ■    Peace    LB 

Miittvloll  Seal  v.  Dent.   -    Ifoo.   P.  0.  3  I  '■>. 

nil,  8  Deac.  L69     The  judgment  was  rested  on  Scott  v.  Surman, 


DEPOSITS    OF    SECURITIES.  137 

The  following  are  the  facts  of  a  case  of  celebrity,  the  judgment  in 
which  lays  down  principles  that  have  always  been  considered  fundamen- 
tal in  this  branch  of  the  law. 

John  Bolton  was  a  merchant  at  Liverpool ;  John  Forbes  and  Daniel 
Gregory,  for  some  years,  and  until  they  became  bankrupt,  were  co-part- 
ners, and  carried  on  business  as  merchants  in  London,  under  the  firm  of 
Burton,  Forbes,  and  Gregory.     On  the  1st  of  May,  1774,  Forbes  and 
Gregory  entered  into  partnership  with  one  Charles  Caldwell  and  one 
Thomas  Smith,  in  the  trade  and  business  of  bankers,  to  be  carried  on  at 
Liverpool,  under  the  firm  of  Charles  Caldwell  &  Co.,  and  so  continued  to 
trade  until  *that  house  became  bankrupt.     The  house  at  Liver-  r^-^i 
pool  had  dealings  and  transactions  with  Forbes  and  Gregory,  «-         J 
carrying  on  business  as  merchants,  under  the  firm  of  Burton,  Forbes 
and  Gregory,  in  London,  and  between  the  two  houses  in  Liverpool  and 
London  there  was  an  open  account  current.     Bolton,  for  some  years, 
and  until  the  house  at  Liverpool  became  bankrupt,  employed  that  house 
as  his  bankers ;  and  they  used  to  procure  bills,  which  had  been  accepted 
by  him,  payable  at  the  house  in  London,  to  be  there  paid  when  they  fell 
due.     Those  payments,  when  made,  were  carried  by  the  house  in  London 
to  their  account  with  the  house  at  Liverpool,  and  by  the  house  at  Liver- 
pool to  their  account  with  Bolton.     In  the  banking  account  between 
Bolton  and  the  house  at  Liverpool,  Bolton  was  made  debtor  for  cash  re- 
ceived of  them,  and  for  bills  accepted  by  him,  payable  at  the  house  in 
London  ;  and  was  credited  in  such  account  for  all  bills  and  cash  paid  by 
him  into  the  said  house.     An  interest  account  was  kept  between  Bolton 
and  the  house  at  Liverpool,  which  was  balanced  every  three  months ;  and 
the  latter  was  also  allowed  a  profit  on  the  said  account  of  one  quarter 
per  cent,  on  bills  and  cash  paid,  either  by  them  or  by  the  house  in  Lon- 
don, on  their  account,  for  the  use  of  Bolton.     Bills  having  been  accepted 
by  Bolton  to  the  amount  of  19,702?.,  payable  at  the  house  in  London,  he 
on  the  28th  February,  1793,  proposed  to  the  house  at  Liverpool,  that 
they  should  procure  the  same  to  be  paid  as  they  fell  due  by  the  house  in 
London,  and  that  to  enable  the  house  at  Liverpool  to  provide  for  such 
payments,  he  should  deliver  to  them  certain  other  bills  of  exchange, 
whereof  those  mentioned  in  the  declaration  were  parcel,  with  his  indorse- 
ment thereon ;  to  this  proposal  the  house  at  Liverpool  agreed.     In  pur- 
suance of  this  agreement,  Bolton  on  the  1st  of  March,  1793,  and  on 
other  days  between  that  day  and  the  16th  of  March,  in  the  same  year, 
delivered  to  the  house  at  Liverpool  several  bills  of  exchange,  amounting 
in  the  whole  to  the  sum  of  11,583?.  2s.  9d.     *  Among  these  was  p-^g-i 
the  bill  for  4,000?.  mentioned  in  the  declaration.     On  the  16th  L         J 
of  March,  1793,  he  delivered  to  the  same  house  other  bills,  with  a  cheque 
on  that  house  (which  they  received  as  cash,)  to  the  amount  of  912?.  Is. ; 
among  these  was  the  bill  for  398?.  18s.  2>d.,  also  mentioned  in  the  decla- 
ration.    All  these  bills  were  the  property  of  Bolton,  and  duly  indorsed 
by  him  ;  the  bill  for  4,000?.  having  also,  previously  to  the  delivery,  been 
accepted  by  him.     On  the  4th  of  March,  1793,  the  bills  accepted  by 
Bolton,  payable  at  the  house  in  London,  were,  by  the  house  at  Liver- 
pool, entered  on  the  debit  side  of  the  account  between  them  and  Bolton; 


[38  GRANT    OH    THE    LAW    OF    BANKING. 

ami  the  bills  delivered  by  Bolton  to  the  house  at  Liverpool  were,  by 
them,  carried  to  his  credit  in  the  same  account,  at  the  times  when  they 

!■  spectively  delivered.  On  the  « K  1  tit  si«K-  «.»f  the  books  of  the  house 
at  Liverpool  it  appeared  that  Bolton's  acceptances,  amounting  to  19,  702J, 

In./.,  were  entered  thus: — 'March  4th,  55  acceptances  due  in 
April,  19,702J.  138.  I"-/.  :"  ami  on  the  credit  side,  the  bills  delivered  to 
the  house  by  Bolton  were  entered,  some  with  the  date  of  their  delivery, 
and  the  .lay  nn  which  they  were  to  tall  due,  and  BOme  with  the  former 
only.  On  the  2nd  <>t'  March,  1703,  the  house  at  Liverpool  remitted  the 
above-mentioned  hill  for  4,000Z.,  together  with  other  bills,  to  the  amount 
in  the  wlmle  nt'  oii.iiuii/.  ami  upwards,  to  the  house  in  London,  to  be  car- 
ried to  the  account  of  the  house  at  Liverpool ;  and  on  the  16th  of  March, 
they  remitted  the  above-mentioned  bill  tor  :;'.is/.  L8s.  Bd.}  together  with 
other  bills,  amounting  in  the  whole  to  S.oiin/.  ami  upwards,  to  be  carried 
to  the  same  account.  This  last  bill  for  398?.  18*.  ■">'/.,  Mas  received  by 
the  bouse  in  London  on  the  L8th  of  March,  1793.  Some  of  the  bills  de- 
livered by  Bolton  to  the  house  at  Liverpool  were  negotiated  by  them, 
and  the  value  received  to  their  own  use.  On  the  28th  of  February, 
1793,  and  from  thence  till  the  bankruptcy  of  the  house  at  Liverpool,  the 
house  iu  London  was  largely  in  advance  to  the  house  at  Liverpool.  On 
.  .  the  lilt h  of  31  arch,  1793,  the  house  in  London  became  insolvent 

'  '  -I  and  on  the  18th  of  the  same  month,  a  commission  of  bankruptcy 
issued  against  them,  under  which  the  present  defendants  were  assignees. 
On  the  Bame  day  the  house  at  Liverpool  also  became  bankrupt,  and  a 
joint  commission  of  the  same  date  issued  against  Charles  Caldwell, 
Thomas  Smith,  John  Forbes,  and  Daniel  Gregory,  as  partner-  in  the 
banking-house  at  Liverpool.  The  house  at  Liverpool,  at  the  time  of 
their  bankruptcy,  was  indebted  to  Bolton  iu  the  sum  of  2,000/.  and  up- 
wards ;  and  none  of  that  parcel  of  bills,  amounting  to  19,7022.  L3s.  lOif. 
accepted  by  Bolton,  payable  at  the  house  in  Loudon,  were  paid  either  by 
that  house  or  by  the  house  at  Liverpool,  but  were  paid  by  Bolton  him- 
self. The  defendants  possessed  themselves  of  the  two  bills  iu  question, 
wignees  of  Forbes  and  Gregory,  and  refused  to  deliver  them  on  de- 
mand. 

On  these  fact-  Bolton  brought  an  action  of  trover  against  the  assign.  <- 
of  Forbes  ami  Gregory,  to  recover  the  bill  for  4,000/.,  ami  also  the 
bill  for  B98J.  gg.  :;./..  but  failed;  after  much  deliberation,  the  court 
laying  down   the   principles — 1.  Bills  in  the  hands  of  a  banker,  in   the 

:  of  a  bankruptcy,  are  to  be  delivered  up,  subject  only  to  the  lien, 
which  the  banker  maj  have  upon  them,  for  the  balance  of  his  account; 
— 2.  If  indorsed  bills  are  deposited  with  a  banker,  and  are  by  him 
negotiated  to  a  third  person,  though  the  purpose,  for  which  they  were 
deposited,  should  !"•  ever  so  cruelly  disappointed,  by  his  becoming  bank- 
rupt, the  original  owner  can  have  no  claim  to  recover  them  in  trover 
against  such  third  person  ;  held  tin-  true  nature  of  the  transaction  to  be 
this— that  Bolton  paid  into  his  bankers'  hands  these  bills,  on  his  general 

int,  for  a  particular  purpose,  viz.,  that  the  bankers  might  he  enabled 
t"  provide  for  the  payment  of  his  acceptances  in  London.  They  were  to 
be  'halt  with  as  tin-  bankers  thought  fit  to  deal  with  them;  to  be  nego- 


DEPOSITS    OF    SECURITIES.  139 

tiated  if  they  thought  fit;  to  be  discounted  *at  Liverpool  if  they  r^-iprv-i 
pleased,  or  remitted  to  whom  they  pleased,  and  were  necessarily  L  J 
to  be  converted  into  money,  in  order  to  be  means  effectual  to  the  purpose 
of  the  deposit.  Forbes  and  Gregory  were  parties  capable  of  requiring  a 
property  in  these  bills,  as  capable  as  any  third  party;  and  must,  there- 
fore, be  considered  as  third  parties,  with  whom  these  bills  had  been 
negotiated.  Therefore  the  case  belongs  to  the  second  class  of  cases  men- 
tioned above,  and  Bolton  could  not  recover  against  the  assignees,  who 
stood  in  the  same  position  as  Forbes  and  Gregory  themselves. (.s) 

The  following  is  a  case  of  the  deposit  of  a  bill  of  exchange  with 
bankers,  by  a  person  who  was  not  a  customer  or  person  having  an  account 
with  them. 

A.  deposits  with  bankers,  at  Sheffield,  a  bill  of  exchange,  dated 
Madras,  October  19, 1842,  drawn  upon  Fletcher  &  Co.,  London,  payable 
at  thirty  days'  sight,  which  had  been  remitted  to  A.,  indorsed  to  his 
order.  On  the  12th  December,  1842,  A.  inquired  at  the  bank,  at 
Sheffield,  how  he  was  to  procure  payment  of  the  bill,  and  was  informed 
by  a  clerk  that  the  bill  must  be  sent  up  to  London,  and  remain  there  till 
it  was  paid.  The  clerk  told  A.  to  indorse  the  bill,  and  call  again  on 
16th  January,  1843,  at  the  bank,  when  he  might  expect  to  receive  the 
amount  of  the  bill.  The  bank  made  no  advance  on  the  bill,  but  indorsed 
it  especially  to  their  London  agents,  in  whose  hands  it  was  when  they 
(the  Sheffield  bankers)  became  bankrupt,  the  fiat  issuing  on  16th  January, 
1843.  The  amount  of  the  bill  was  received,  by  the  London  agents,  on 
the  18th  of  that  month,  and  was  placed  by  them  to  the  bankrupts'  credit. 
On  these  facts  the  decision  was,  that  the  proceeds  of  the  bill,  after  satis- 
fying the  lien  of  the  London  bankers,  for  any  balance  that  might  be  due 
to  them  from  the  Sheffield  bank,  must  be  paid  to  A. ;  and  if  there  were 
other  depositors  of  bills,  under  similar  circumstances,  according  to  the 
rule  in  bankruptcy,  the  proceeds  *of  all  the  bills  were  to  be  r*iRi"i 
distributed  rateably  among  them,  without  any  preference  of  one  L  -I 
over  the  other.  (t\ 

Relation  of  Banker  and  Country  Correspondent. — Having  thus  dis- 
cussed the  relations,  rights,  and  liabilities,  of  customer  and  banker, 
depositing  bills  with  the  latter  and  having  touched  upon  a  case,  of  the 
same  kind,  between  a  banker  and  a  stranger;  it  remains  to  notice  what 
are  the  relations,  in  similar  circumstances,  when  dealings  between  the 
banker  in  the  country,  and  his  London  correspondents,  are  added  to  the 
former  simple  relation  of  banker  and  customer.  Now  here,  notwith- 
standing the  general  rule,  that  indorsed  bills  of  exchange,  deposited  by 
the  customer  with  his  banker,  are  at  the  absolute  disposal  of  the  banker, 
and  though  the  customer,  on  the  bankruptcy  of  the  banker,  may  recover 
in  specie  such  of  them  as  remain  in  the  banker's  hands,  subject  to  the 
banker's  lien  in  respect  of  advances,  though  he  cannot  follow  the  pro- 
ceeds if  they  have  been  converted,  yet  this  absolute  property,  of  the 
banker,  in  the  bills,  may  be  qualified  by  circumstances. 

(s)  Bolton  v.  Puller,  1  B.  &  P.  539. 

(t)  Ex  parte  Froggatt,  3  M.  D.  &  D.  G.  322. 


140         GRANT  ON  THE  LAW  OF  BANKING. 

Thus,  it  I  customer  deposits  indorsed  bills  with  his  country  banker, 
to  obtain  payment  on  them,  and  the  banker  remits  them  to  the  London 
bank,  who  are  hi.-  correspondents,  bo  receive  and  pay  bills,  and  as  such 
agents  have  an  allowance  from  him  for  so  doing,  and  then  the  London 
bank  becomes  bankrupt,  with  the  bills  remaining  undue  in  his  hands; 
the  assignees,  upon  receiving  the  proceeds  of  the  bills,  must  pay  them 
over  to  the  country  bank,  subject  to  the  lieu  of  the  London  bankers, 
for  anything  remaining  due  from  the  country  bank  to  them  upon  the 
contract  between  them;  the  London  bankers  being  the  paid  agents  of  the 
country  bank,  for  this  purpose,  of  getting  bills  paid,  and  remitting  the 
proceeds,  and  their  power  over  the  bills  being  limited  to  that  purpose. 

The  same  would  be  the  case  it  the  London  banker,  in  the 
L  "J  ^annual  account  between  him  and  his  correspondent  in  the 
country,  there  being  no  proof  of  agency,  had  entered  the  bills  as  the 
property  of  the  correspondent.  In  the  former  case,  he  would  be  consi- 
dered as  the  factor  of  the  country  banker ;  in  the  latter,  there  is  raised 
an  express  declaration  of  trust. (h) 

Such,  then,  are  the  relations  of  country  banker  and  correspondent,  in 
case  of  the  bankruptcy  of  the  London  correspondent.  The  result  to  the 
customer  remains  to  be  inquired  into. 

Now,  it  manifestly  would  be  unjust,  that  the  customer  should  be 
affected,  by  the  bankruptcy  of  an  agent,  whom  he  has  no  voice  in  select- 
ing, or  by  the  state  of  the  accounts  between  his  banker  and  that  agent ; 
therefore,  although  the  country  banker  receives  the  proceeds  of  the  bills, 
minvt  tin'  Bum  requisite  tij  satisfy  the  London  banker's  lien  for  advances 
(if  any,)  and  to  indemnify  the  estate  against  acceptances  or  other  engage- 
iii' nt-.  which  the  London  banker  is  under  at  the  time  of  the  bankruptcy, 
«'ii  account  of  the  country  bank,  a  sum  equal  to  the  whole  amount  of 
the  proceeds  of  the  bills  must  be  paid  by  the  country  banker  to  the 
customer,  (subject  of  course  to  the  state  of  the  customer's  account ;) 
for  90  "iily  ran  his  contract  with,  or  duty  to  his  customer,  be  performed. 

So,  in  another  case,  where  bills  were  remitted  by  a  country  bank  to 
their  correspondents  in  London,  and  stood,  at  the  bankruptcy  of  the 
latter,  entered  -hurt,  not  being  then  due,  it  was  ordered,  on  petition  of 
the  country  bank,  that  the  bills  should  be  delivered  up  to  them  by  the 
Dees.  The  country  hankers,  in  this  instance,  were  not  creditors  of 
th^  London  hankers  when  this  petition  was  first  presented,  the  cash 
balance  being  against  them,  hut  had  Binoe  become  bo,  turning  the  balance 
r*ii"n  ln  ''"''''  favour,  by  taking  up  the  acceptances  *given  by  the 
'  J  London  honse  on  their  aocount.(x)  The  country  hankers  must 
have  accounted  to  the  customer,  who  deposited  the  hills  with  them,  for 

the  entile  proceeds  Of  them. 

The  following  ifl  a  case  of  bills  deposited  by  country  bankers  with  their 
London  hanker-,  on  which  the  London  bankers  had  a  lien, and  on  which 
they  were,  therefore,  held  entitled  to  recover  against  the  acceptor,  (who 

('/)  F.v  parte  Pease,  1   &  Si  parte  Wakefield  Bank,  id.  243;  see  per 

Bayley,  .)..  2  I;,  .<c  <'.  429,  430. 

(x)  Ex  parte  Etowton,  1  Bote,  15;  so  Ex  parte  Buchanan,  1  Rose,  280;  Ex  parte 
Burton  Bank,  '.'  id.  102. 


DEPOSITS    OF    SECURITIES.  141 

stood  in  the  character  of  surety  for  the  country  bank,)  by  virtue  of  the 
lien. 

A  banking  house  at  Abingdon,  being  indebted  to  their  London  cor- 
respondents, are  urged  by  them  to  send  them  up  any  bills  they  could 
procure.  Accordingly  they  sent  up  two  bills  for  account,  which  had 
been  accepted  by  A.  for  their  accommodation,  and  which  became  due 
respectively  19th  March  and  19th  April,  1814,  each  of  them  being  dated 
13th  December,  1813.  The  balance  of  the  cash  account,  on  each  of  the 
two  first-mentioned  dates,  was  considerably  in  favour  of  the  country 
bankers.  There  were  also  periods  subsequent  to  those  dates,  when  the 
general  account  was  in  favour  of  the  Abingdon  bankers,  but  they  after- 
wards failed,  being,  at  that  time,  indebted  to  the  London  bankers,  in  a 
sum  exceeding  the  principal  and  interest  of  the  bills.  The  court  at  Nisi 
Prius,  held  the  meaning  of  the  expression  "  for  account,"  to  be  for  the 
then  floating  account;  and  it  was  remarked,  "  There  was  a  period  when 
the  lien,  on  the  bills,  of  the  London  bankers,  ceased  to  attach,  and  when 
the  bills  might  have  been  redeemed ;  but  they  were  not  reclaimed,  and 
by  allowing  them  to  remain,  in  the  hands  of  the  London  bankers,  their 
lien  revested  when,  upon  fresh  advances  made,  the  balance  turned  in 
favour  of  the  London  bankers."  The  action  was  brought  by  the  London 
bankers  against  the  acceptor,  in  virtue  of  their  lien,  and  by  way  of 
enforcing  and  realizing  it ;  and  there  having  been  a  verdict  *in  -j,-. ^ .-, 
their  favour,  the  court  in  banc,  confirmed  the  verdict.^)  L         -J 

The  following  is  a  case,  which  may  fitly  have  a  place  here,  in  connec- 
tion with  the  subjects  above  discussed,  and  with  the  last  case.  A.  accepts 
four  bills  for  the  accommodation  of  B.  B.  indorses,  and  deposits  them 
with  his  bankers,  as  a  collateral  security  for  his  floating  balance  with 
them.  B.  becomes  bankrupt,  when  the  bankers  proved,  for  a  balance 
greatly  exceeding  the  amount  of  the  bills,  exhibiting  in  their  proof  these 
four  bills,  among  others,  as  securities,  then  held  by  them,  and  they  after- 
wards received  a  dividend,  of  two  shillings  in  the  pound,  on  the  amount 
of  their  proof.  The  bills  were  subsequently  paid  in  full  by  A.  :  and  it 
was  held,  that  the  bankers  were  bound  to  refund  to  A.  the  dividend  of 
two  shillings  on  the  amount  of  the  bills,  (s) 

The  decision  on  the  following  facts,  illustrates  the  relation  of  country 
banker  and  London  correspondent,  when  the  former  deposits  with  the 
latter,  a  security,  by  way  of  pledge. 

A  customer  gives  his  promissory  note  to  his  bankers,  to  secure  repay- 
ment of  advances.  They  become  bankrupt,  but,  at  that  time,  the 
customer  holds  bank  notes  of  their  bank  to  a  greater  amount  than  his 
promissory  note,  which,  he  had  all  along  reason  to  believe,  was  still  in 
the  possession  of  the  banker.  In  fact  they  had  deposited  it,  by  way  of 
pledge,  with  their  London  correspondents.  The  London  bankers  enforce 
the  payment  of  it  from  the  customer  of  the  country  bank,  the  maker  of 
the  note ;  but  the  securities,  in  the  hands  of  the  London  bank,  were 
altogether  more  than  sufficient  to  cover  what  was  due  to  them  from  the 
bankrupts,  and  the  surplus  is  returned  to  the  assignees. 

(y)  Atwood  v.  Crowdie,  1  Stark.  N.  Pri.  R.  483. 
(z)  Ex  parte  Holmes,  4  Deac.  82. 


]  12         GRANT  ON  THE  LAW  OF  BANKING. 

Held,  that  as  tin-  customer  might  have  Bel  off  the  aotea  he  held  against 
the  bill  in  the  hands  of  the  bankrupts,  he  *was  entitled  to  recover 

[  1"l)J  h~  amount  from  tin'  assignees.  The  promissory  note  was  payable 
on  demand,  with  interest  The  oase  is  singular  in  its  circumstances.  It 
is  obvious,  that  the  customer,  thinking  that  hi-  promissory  note  was  still 
in  the  hands  of  the  hank,  and  therefore  takin-  their  notes,  in  the  way  of 
business,  which  he  might  not  have  continued  to  do,  if  he  had  known 
that  they  had  parted  with  his  promissory  note,  was  put  in  a  different 
situation,  by  their  conduct.  In  a  certain  sense,  too,  the  property  in  the 
promissory  note  had  never  left  the  bankrupts  ;  they  had  only  parted  with 
the  possession  of  it  by  way  of  pledge;  then  the  question  would  be,  whether 
the  case  did  not  come  strictly  within  the  terms  of  the  class  of  mutual 
credit  in  -tat.  6  Geo.  IV.  c.  L6,  s.  50,  (now  replaced  by  1-  &  13  Vict.  c. 
106,  s.  171,)  though  the  ultimate  decision  did  nut  depend  wholly  on  that 
question. (a) 

Bills  deposited  by  Strangers. — Several  of  tin' example.-,  cited  above, 
have  been  eases  where  short  bills  have  been  deposited  by  customers;  it 
being  the  law,  as  above  stated,  that  bills  are  considered  short,  not  merely 
from  the  fact  of  their  being  entered  so,  but  from  a  consideration  of  the 
habits  of  dealing  between  the  parties,  and  all  the  circumstances. 

The  following  is  an  instance  of  a  decision,  upon  facts  somewhat 
different  ;  where,  viz.,  the  bills  were  not  short  bills,  and  the  party  depo- 
siting was  not  a  customer.  A  person  deposit-  with  bankers  two  bills, 
(one  for  600/.,  and  the  other  for  400/.,)  indorsed  by  him;  it  being  agreed 
that  he  Bhould  draw  for  the  amount  of  1,000?.,  the  bankers  refusing  to 
discount    them;    he,  in  fact,  only  draws  to   the   amount   of  65?.,  and   the 

bankers  employ  a  broker  to  discount  the  bills  j  and  then  become  bank- 
rupt, in  Less  than  three  weeks,  after  the  bills  had  been  deposited  with 
them.  It  was  not  the  usage  of  the  bank  to  treat  any  bills  paid  in,  by  a 
customer,  as  short  bills;  but  to  consider  all  those  paid  in  by  *any 
L  J  'J  one,  a-  the  property  of  the  hank,  and  to  be  paid  in  on  the  cus- 
tomer's general  account  ;  and  in  keeping  their  accounts,  they  had  not, 
like  many  oilier  bankers,  a  cash  column  and  a  bill  column,  in  their 
books,  but  it  was  their  practice  to  blend  both  bills  and  cash  ;  these  were 
entered  a-  bills.  There  was  no  cash  balance,  in  favour  of  the  person 
who  paid  in  these  bills,  at  the  time  of  the  bankruptcy,  and  no  evidence 
of  any  other  banking  account  in  his  name,  but  that  on  the  bills.  It  was 
part  of  the  above  agreement  for  his  drawing,  &c.,  that  he  was  not  to  draw 
..at  the  amount  of  the  100?.  bill  until  the  600?.  bill  was  paid,  lie  was 
held  to  be  entitled,  on  the  bankruptcy,  to  the  proceeds  of  the  bills. (6) 

Sere,  it  i-  evident,  the  property  in  the  bills  had  never  passed  from 
the  depositor;  he  was  led  to  consider  that  the  bankers  would  not  buy 
them j  their  discounting  them  aft.  rwards  was  without  his  knowledge;  he 

would  have  been  entitle, 1  to  the  bill-,  if  tiny  had   remained  in  specie,  in 
the  hand-  of  the  bank,  i  -. 

East  India  Bills.  —  Hitherto  the  tacts,  in  the  various  cases  cited,  have 


(a)  Ex  parte  Staddon,  3  If.  D.  ft  l».  Q.  256. 
Ej  parte  Edwards,  2  II.  D.  *D.  G 


DEPOSITS    OP    SECURITIES.  143 

arisen  respecting  ordinary  bills  of  exchange ;  the  following  was  the  case, 
of  a  deposit  of  East  India  bills,  for  safe  custody,  &c. 

On  6th  July,  1836,  A.  B.  deposits  with  her  bankers  at  Carlisle,  for 
safe  custody,  certain  East  India  bills,  specially  indorsed  by  her,  with 
instructions  to  receive  the  amount  when  due;  the  indorsement  being 
made  merely  for  the  protection  of  the  property.  East  India  bills,  in 
general,  are  negotiable  in  the  market,  like  common  bills  of  exchange, 
and  would,  therefore,  in  the  ordinary  course,  be  only  deemed  securities. 
The  balance  of  A.  B.'s  account,  exclusive  of  the  amount  of  the  bills,  was 
then  in  her  favour,  and  continued  so  up  to  the  bankruptcy  of  the  bankers. 
They  charged  discount  on  the  bills,  in  their  account  with  her,  and  she 
might  *have  drawn  on  them  for  the  amount  of  them,  it  being  p^.,., 
the  custom,  of  the  bankers  of  Carlisle,  to  consider  ordinary  bills,  •-  J 
so  deposited,  as  cash.  The  fiat  issued  23rd  November,  1836.  The 
bankers  paid  away  the  bills  to  a  creditor,  with  whom  the  assignees  after- 
wards settled  an  account,  charging  him  with  the  amount  of  the  bills,  and 
receiving  from  him  the  balance  due  to  the  estate.  Here  the  bankers 
acted  in  express  violation  of  the  directions  under  which  the  bills  were 
deposited,  and  A.  B.  was  held  to  be  entitled  to  be  reimbursed  the  whole 
amount  of  the  bills  from  the  assignees.  It  would  not  have  made,  it 
appears,  any  difference,  if  she  had  overdrawn  her  account.  These  East 
India  bills  were  drawn  (or  signed  by  order  of  the  Governor  in  Council  of 
Bombay,)  on  the  Court  of  Directors  of  the  East  India  Company,  and 
were  on  account  of  the  principal  of  the  Bengal  Six  per  Cent.  Reinittable 
Loan  of  1822  and  1823,  payable  18th  January,  1837,  so  that  they  never 
were  intended,  by  the  parties  to  them,  to  be  considered  in  the  light  of 
common  bills  of  exchange. (c\ 

The  reason  why  it  would  not  have  made  any  difference,  in  this  case, 
if  the  account  had  been  overdrawn,  at  the  time  the  bankers  disposed  of 
the  bills,  appears  to  be  this  : — Where  bills,  &c,  are  remitted  to  a  person, 
for  a  specific  purpose,  he  is  bound  to  perform  that  purpose,  or  return  the 
securities;  if  he  receives  the  amount  contrary  to  the  directions  of  the 
remitter,  he  cannot  apply  it  to  the  payment  of  his  own  debt ;  therefore, 
if  the  account  of  A.  B.  had  been  overdrawn,  it  would  not  have  been  an 
excuse  for  the  bankers  to  say,  they  had  sold  or  discounted  the  bills,  or 
paid  them  away,  and  carried  the  amount  to  the  customer's  account,  and 
applied  it  in  reduction  of  her  debt  to  them.(tZ) 

*Bank  Post  Bills. — So,  if  a  person  goes  to  his  banker,  and 
says,  here  are  10007.,  in  Bank  of  England  notes,  get  me  a  bank 
post  bill  for  them ;  the  banker  cannot  receive  them  silently,  as  though 
acquiescing  in  the  object  of  the  customer,  and  then  set  up  his  lien  and 
apply  them  in  reduction  of  the  balance,  against  the  customer,  on  his 
account,  (e) 

(c)  Ex  parte  Bond,  1  M.  D.  &  D.  G.  10. 

(d)  Ex  parte  Brown,  3  Deac.  91,  per  Erskine,  (J.  J.,  which  case  also  recognizes 
the  principle  that  bills  remitted,  clothed  with  a  trust,  are  not  within  the  reputed 
ownership  clause,  6  Geo.  IV.  c.  16,  s.  72,  now  replaced  by  12  &  13  Vict.  c.  106,  s. 
125 ;  so  1  T.  R.  623 ;  1  Sch.  &  L.  328. 

(e)  See  observations  by  Ld.  Lyndhurst,  C,  and  Ld.  Brougham,  Brandao  v.  Bar- 
nett,  12  Cla.  &  F.  802. 

January,  1857. — 11 


[*168] 


14  4  0  R  AN  I    OH    THE    LAW    OF    B  A  N  KIN 

Then,  such  expressions,  used  in  the  Utters  of  remitters  of  bills  or 
otherwise,  as,  thai  thej  expected  the  banker  « to  do  the  needful,"(/)  Of 
«to  cover  as  in  due  time,"fo)  <1"  cot  enlarge  the  powers  of  the  banker, 
or  constitute  a  special  contract,  authorising  him  to  deal  with  the  bills  as 
his  own,  nr  relieve  him  from  tin  obligation  of  retaining  the  bills  till  due, 
if  remitted  to  receive  payment  of  them. 

So  where  a  bank  post  bill  bad  been  remitted,  by  a  customer  to  his 
bankers,  with  a  letter  desiring  them  to  place  it  to  bis  credit,  and  to  send 
him  a  receipt,  and  credit  bad  been  given  him,  in  bis  account,  for  the 
amount  of  the  bill,  and  a  receipt  given  him,  in  the  same  way,  as  if  it 
had  been  a  cash  payment  ;  the  bank  post  bill,  as  is  mostly  the  case  for 
the  sake  of  security,  when  bills  are  sent  into  the  country,  was  unaccepted. 
Now,  in  such  case,  if  the  customer  had  drawn  a  cheque  upon  the  bankers 
for  a  Bum  exceeding  his  balance,  supposing  the  bank  post  bill,  lor  which 
be  had  credit  in  the  bankers' books,  were  not  reckoned,  and  the  bankers 
bad  refused  to  honour  the  cheque  in  respect  of  that  deficiency,  it  seems 
probable  that  an  action,  such  as  it  has  been  already  shown  a  cu>toiner, 
who  has  an  undoubted  balance  in  his  favour,  may  maintain  in  general, 
on  refusal  to  pay  his  cheque,  could  not  have  been  supported ',  for  the 
bankers  might  have  answered  truly,  that  an  unaccepted  bill,  though  of 
r*ir«-.  the  Bank  of  England,  payable  seven  days  after  sight,  is,  *for 
'  ''  J  manv  purposes,  not  equivalent  to  cash  ;  and  in  fact,  their  duty 
had  been  pi  rformed  by  transmitting  the  paper  to  London,  for  acceptance, 
and  raising  the  money  upon  it  within  a  reasonable  time.  It  was  appa- 
rently, though  with  hesitation,  concluded,  therefore,  that  the  bank  post 
bill  had  never  become  vested,  as  property,  in  the  bankers;  in  other 
word-,  it  was  never  in  the  character  of  cash  between  these  parties;  the 
ordinary  relation  of  banker  and  customer  remaining  between  them  not 
regulated  or  qualified,  by  any  particular  agreement,  express,  or  to  be 
inferred  from  circumstances  or  habits  of  dealing.  The  customer,  there- 
fore, was  entitle,]  to  the  proceeds  as  against  the  assignees.^ 

Debentures. — So  where  debentures  for  tontine  annuities  were  deposited 
with  bankers,  and  their  assignees  claimed  a  lien  on  them,  and  one  of 
the  banker-  bad  received  the  dividends  upon  the  debentures;  it  was 
held,  that  the  deposit  was  in  the  nature  of  a  trust,  and  the  debentures 
not.  therefore,  in  the  Older  and  disposition  of  the  bankers  at  the 
time  of  their  bankruptcy. (<) 

Bankruptcy — Reputed  Ownership.' — -Mention  has  been  made(/.-j  of 
the  position  thai  bills  of  exchange,  remitti  d  to  a  bank'  r,  clothed  with  a 
tru-t.  do  nol  pass  to  the  assignees,  upon  the  bankruptcy  of  the  banker, 
as  they  would  do  it'  they  were,  in  such  case,  within  the  doctrine  of 
reputed  ownership ;(^)  but,  nevertheless,  in  all  other  circumstances,  bills 

Ei  parte  Smith,  Back  Jombart  \.  Woollett,  2  My.  &  C.  389. 

(A)  Ex  parte  Atkins,  3  M.  D.  A  D.  G  ]  ■  doubt  as  to  what 

i -i  the  precise  character  of  bank  post  bills.     In  Forbes  r.  Marshal],  im  L.  J.  (N.  S.) 
Kx.  305,  308,  the]  «ere  considered  by  Polloi  k   0.  B.,  and  Alderson,  B.,  to  be  bills 
ichange;  by  Martin.  B.,  to  t>e  promissory  w  I   .  id.  309. 

(ii  I  looglas,  3  Dea.  &  0.  310. 

(k)  Bee  rap.  j>.  142;  Bi  parte  Brown,  3  Deac.  91. 
(/)  G  Geo.  IV.  c.  1C.  3.  72  ;  now  replaced  by  1  2  K  13  Viet.  c.  IOC.  s.  125. 


DEPOSITS    OF    SECURITIES.  145 

of  exchange,  placed  in  the  hands  of  a  banker,  will  so  pass.  For  instance, 
if  A.,  who  has  had  no  previous  *  dealings  with  a  banker,  in  the  ^.-^ 
country,  applies  to  him  to  give  him  a  bill,  on  London,  for  three  L  -» 
bills  of  exchange,  of  which  the  applicant  is  holder,  and  the  banker  does 
so,  and  the  bill  given  by  the  banker  is  afterwards  dishonoured,  this 
transaction  is  a  complete  exchange  of  securities,  and  trover  will  not  lie 
at  the  suit  of  A.  for  the  three  bills ;  and,  even  if  the  exchange  had 
not  been  absolute  and  complete,  the  banker  having  become  bankrupt, 
and  the  three  bills  having  come  to  the  hands  of  the  assignees,  must  be 
considered  as  goods  and  chattels,  in  the  order  and  disposition  of  the 
bankrupt,  at  the  time  of  his  bankruptcy,  within  the  meaning  of  the 
bankrupt  law.  For  the  bills  were  indorsed  to  the  bankers,  who  had  the 
power  of  disposing  of  them,  and,  in  like  manner,  A.  had  a  similar  power 
over  the  bill  handed  to  him  in  exchange ;  and  the  former,  being  nego- 
tiable securities,  and  having  remained  in  the  hands  of  the  bankrupts 
until  the  bankruptcy,  seem  necessarily  to  have  been  held  within  the 
doctrine.  The  case  was  held  to  be  quite  distinguishable  from  that  of 
bills  deposited  by  a  customer  clothed  with  a  trust,  for  trust  property  is 
always  considered  not  to  be  within  the  principle  of  the  bankrupt  law  in 
this  respect. (m) 

But  it  is  not  only  when  bills  of  exchange  or  other  securities  are  depo- 
sited, for  a  specific  purpose,  with  bankers,  that  the  property  remains  in 
the  depositor ;  there  is  another  class  of  cases,  where  money,  paid  into  a 
bank,  may,  under  certain  circumstances,  remain  the  property  of  the 
party  paying  in,  and  be,  therefore,  recoverable,  on  bankruptcy,  from  the 
assignees. 

Thus,  where  a  person  had  deposited,  after  banking  hours,  a  large 
sum  of  money  with  the  manager  of  a  provincial  bank,  at  the  banking 
house,  the  manager  knowing  that  the  *bank  was  on  the  eve  of  [-#-171-1 
stopping,  though  no  resolution  to  that  effect  had  been,  in  form,  L  J 
come  to  by  the  bankers,  and  he  had  placed  the  money  in  a  place  by  itself, 
separate  from  the  funds  of  the  bank,  and  the  bank  never  after  that  day 
opened  for  business;  it  was  held,  at  Nisi  Prius,  by  Lord  Tenterden,  C. 
J.,  that  the  depositor  was  entitled  to  recover  from  the  assignees. (?i) 

So  where  it  was  the  usage  of  a  banking  house,  that  money,  paid  in 
after  banking  hours,  should  be  put  into  a  separate  place  of  deposite,  and 
entered  in  a  counter  book,  but  not  carried  to  the  customer's  account  till 
the  next  day ;  and  a  customer  paid  in  a  5007.  Bank  of  England  note 
after  banking  hours,  and  the  banker,  having  before  resolved  not  to  re- 
open for  business,  placed  the  note  in  a  separate  place,  and  next  morning 
stopped  payment  and  became  bankrupt,  the  customer  recovered  from  the 
assignees,  the  bank  note  being  held  to  remain  his  property. 

It  may  be  further  observed,  that  the  usage  was  for  the  customer  to  be 
considered  to  be  entitled  to  draw  upon  money  so  paid  in,  at  the  opening 
of  the  bank,  on  the  following  morning.     The  "  counter  book"  was  a  book 

(to)  Hornblower  v.  Proud,  2  B.  &  A.  327 ;  see  Bryson  v.  Wylie,  1  B.  &  P.  83, n. ; 
and  see  instance  of  a  somewhat  like  transaction,  but  not  amounting  to  an  exchange, 
where  the  result  was  different ;  Parke  v.  Eliason,  1  East,  544. 

(n)  Threlfall  v.  Giles,  (Lancaster  Summer  Ass.  1822,)  cited  2  M.  &  Rob.  492. 


14|  GRANT    OS    T1IK    LAW    OF    BANKING. 

in  which  an  entry  was  made  of  all  moneys  paid  in  to  the  bank,  as  the 
same  was  paid  in,  and  wan  always  resorted  to,  to  ascertain  whether  money 
has  been  paid  in  by  a  customer,  daring  the  day,  before  a  cheque  of  such 
customer  was  dishonoured.  The  bank  note  was  not  entered  in  any  other 
book  of  the  bank,  nor  was   it  in   any  way  carried   to  the  account  of  the 

customer,  or  entered  in  his  pass  1 k,  and  never  was  mixed  with  the 

te  of  the  house,  (o) 

\  Bum  of  money,  consisting  partly  of  Hank  of  England  notes  and 
country  bank  notes,  partly  of  oheques  on  country  bankers,  and  partly  of 
coin,  was,  after  banking  hours  on  a  Saturday  evening,  placed  in  the 
hands  of  the  manage*  of  *the  bank,  at  the  banking  house,  where 
L  -I  he  resided,  and  he  gave  a  receipt,  with  the  word*  "to  be  accounted 
,/•  mand,"  for  the  Bame,  data  d  as  of  the  following  Monday;  they 
were  not  entered  in  any  of  the  bank  books  by  the  manager,  or  in  any 
way  mixed  with  the  bank  moneys,  but  were  placed,  by  the  manager, 
in  a  bag,  in  which  there  was  nothing  else.  The  bank  never  opened 
again  for  business.  The  partners  in  it  were  afterwards  made  bank- 
rupts  :  the  money  bo  deposited  was  held,  in  bankruptcy,  to  pass  to  the 

; B.(jp)     In  this  case,  however,  the  manager  was  in  the  habit  of 

ing  deposits  after  banking  hours,  and  the  customers,  from  whom 
the  above-mentioned  deposit  was  received,  were  in  the  habit  of  making 
deposits  after  the  bank  had  closed,  and  such  deposits  had  always  been 
treated,  by  both  parties,  as  if  they  had  been  regularly  made.  One  of 
the  partners  had  already  resolved  to  commit  an  act  of  bankruptcy,  and, 
on  the  same  evening  of  Saturday,  did  commit  an  inchoate  act,  unknown 
to  the  other  and  remaining  partner;  the  firm  did  not  become  bankrupt 
until  the  Monday. 

If  money  be  remitted  to,  or  deposited  with  a  banker,  by  a  customer 
for  the  Bpecial  purpose  of  paying  certain  bills,  accepted  by  the  customer, 
and  about  to  become  duo,  and  the  bankers,  without  making  any  commu- 
nication to  the  customer,  dishonour  the  bills,  the  balance  on  the  cus- 
tomer's account  being  against  him  at  the  time,  and  the  customer  after- 
wards become  bankrupt,  and  bis  assignees  bring  an  action  against  the 
bank<  I-  for  the  injury  caused  to  the  bankrupt  by  their  conduct,  and  ob- 
tain a  verdict  for  a  sum  equal  to  the  amount  due  on  the  bills  :  it  will  be 
held,  in  bankruptcy,  that  they  are  entitled  to  retain  this  sum  against  the 

holders   of  the    billB,    Who    Wilt.    hoWeVef,    be    alloWed    to   pl'oVe.(r/) 

:i  Before  passing  from  the  subject  of  remitting  of  bills,  &C,  it 

I      '"-I  may  be  desirable  to  reverl  to  the  subject  of  the  relations,  in  this 
respect,  between  bankers  and  their  correspondents. 

Relation  of  Bank*  r  and  Correspond*  nt. — Various  occasions  occur  for 

observing  the  frequency,  in   questions  of  banking  law,  with  which  the 

principle  is  applicable  bj  which  the  incidence  of  a  loss  is  determinable, 

qui  -lion  is,  which  of  two  parti)  8,  A',  ho  are  both   equally  iuuo- 

(o)  Sadler  r.  Batcher,  2  If.  4  Bob.  I 

I  :    Glutton,  I  Fonbl.  R.  167  ;  see  Sadler  v.  Belcher,  2  H.  &  Rob.  489, 

difference  between  th<  that,  in  the  latter,  the  determination  to 

mil  an  act  of  bankruptcy  had  been  taken,  by  all  the  partners,  before  the  monej 
paid  in  :  moreov<  r,  no  receipt  was  given 
Bx  parte  S]  I  onbl.  51. 


DEPOSITS    OF    SECURITIES.  147 

cent  of  fraud,  or  crime,  in  the  transaction,  must  bear  a  loss.  This  prin- 
ciple is  particularly  deserving  of  attention  in  questions  arising  on  deal- 
ings of  a  customer  with  his  bankers,  who  are  obliged,  in  order  to  com- 
plete the  intended  transaction,  to  employ  the  agency  of  their  correspon- 
dents— other  banking  houses,  carrying  on  business  at  a  distance. 

Thus,  if  A.  employs  his  bankers  to  perform  some  duty  for  him,  which 
can  only  be  brought  to  a  conclusion  in  some  place  at  a  distance,  whether 
in  this  country  or  in  foreign  parts,  so  that  it  becomes  necessary  that  his 
bankers  should  employ  the  agency  of  persons  acting  in  that  place,  and  a 
loss  ensues  from  the  conduct  of  the  agents,  whether  direct  or  interme- 
diate, who  are  so  employed,  and  the  question  arises  whether  A.  or  the 
bankers  are  to  bear  that  loss,  in  all  such  cases  it  is  the  bankers  who 
must  suffer;  for,  of  the  two,  they  are  the  parties  whose  conduct  has 
led  to  the  loss ;  for  it  was  they  who  chose  the  agents,  or  who  chose 
the  correspondents  who  selected  the  actual  agents ;  it  is  their  act, 
therefore,  which  has  led  to  the  occurrences  which  have  caused  the  loss, 
and  that  loss,  as  between  themselves  and  A.,  they  must  be  liable  for; 
in  other  words,  A.  has  a  right  of  action  against  them,  and  will,  in  a 
court  of  law,  be  compensated  for  the  injury  he  has  sustained.  The 
bankers,  however,  will  have  a  right  of  recourse  against  their  correspon- 
dent, by  whose  laches  or  default,  either  primarily  or  through  the  default 
of  any  one  whom  the  latter  may  have  intrusted  with  the  business,  the 
bankers  have  incurred  the  loss. 

*The  following  case  well  illustrates  this  position  : —  p,.-.  _ .-. 

A  customer  of  a  bank  sends  orders  to  his  bankers  to  obtain,  L  -1 
for  him,  payment  of  a  bill  of  exchange,  drawn  by  him  on  a  person  in 
Calcutta ;  the  bankers  accept  the  employment,  and  write  him  word  that 
they  had  done  so,  promising  to  credit  him  for  the  amount  of  the  bill 
when  received.  In  the  usual  course,  they  transmit  the  bill  to  their  cor- 
respondents in  London,  by  whom  it  is  forwarded  to  the  house  of  A.,  in 
Calcutta,  to  get  payment;  it  is  paid  into  A.'s,  immediately  after  which 
they  fail.  The  customer,  having  been  advised,  by  his  banker,  that  the 
bill  was  paid,  they  were  held  to  be  his  agents  to  obtain  payment,  and  it 
was  also  decided  that  ipso  facto,  upon  payment  being  made,  they  became 
liable  to  him  for  the  amount  received;  and  that  any  loss  which  might  arise 
from  the  conduct  of  the  bankers'  sub-agents,  between  whom  and  him- 
self no  privity  was  established,  must  fall  on  the  bankers. (?•)  And  the 
case  was  said  not  to  be  distinguishable  from  the  case  of  a  customer,  of  a 
bank  in  London,  sending  them  a  bill,  or  cheque,  with  orders  to  get  pay- 
ment, and  their  clearing-house  clerk,  instead  of  returning  with  the 
balance,  absconds ;  in  which  ease  the  bankers  would  clearly  be  liable,  to 
the  customer,  for  the  amount  of  the  bill.(s) 

Also,  the  state  of  the  accounts,  between  the  customer's  bankers,  and 
any  of  the  correspondents  they  may  employ  in  the  transaction,  can  make 
no  difference. 

Hence,  in  all  cases  where  a  customer  desires  his  bankers  to  obtain 

(r)  Mackersy  v.  Ramsay,  9  Cla.  &  F.  818. 
(5)  Per  Ld.  Lyndhurst,  C,  id.  848. 


G  K  A  S  T    OB    THE    I-  A  W    0  F    B  A  N  K  I  N  G. 

payment  of  a  bill  for  him,  and  they  do  not  refuse,  or  if  a  stranger  makes 
ime  request,  and  they  agree  to  perform  it,  they  are  liable  for  the 
amount  of  the  bill,  whether,  after  remitting  it  to  their  correspondents,  to 
get  the  payment,  its  amount  is  returned  to  them  or  not,  provided,  in  the 
latter  case,  the  cause  is  the  default  of  their  cm-respondents. 

'Another  transaction,  between  a  bans:  in  the  country  and  its 
J  town  correspondent,  may  here  be  mentioned,  though  no  definite 
n  -iilt  was  arrived  at. 

\  bill  of  exchange,  for  4001.,  had  been  drawn  by  Cooke  and  Co., 
bankers  at  Sunderland,  on  Bruce  and  Co.,  bankers  in  London,  (but  had 
not  been  accepted  by  them.)  payable  at  forty  days,  in  favour  of  Herring, 
and  by  him  it  was  indorsed  generally  to  Hum.  in  satisfaction  of  a  debt, 
and  by  him  indorsed,  before  it  was  duo,  t<>  Cooke  and  Co.,  in  exchange 
tm-  a  draft  for  1,080/.,  being  the  amount  of  that  bill  and  certain  others, 
Burn  being  to  a  much  larger  amount  indebted  to  them.  Cooke  and  Co., 
instead  of  cancelling  the  bill  for  400/.,  remitted  it,  on  the  day  of  its  date, 
but  not  indorsed  by  them,  to  Bruce  and  Co.,  their  correspondents,  it 
being  their  usage  so  to  remit  bills  for  the  purpose  of  being  written  off. 
This  bill,  however,  was  not  remitted  direct  in  the  usual  manner,  but 
sent,  under  cover,  to  one  Alexander,  a  bill  broker,  through  the  medium 
of  Simpson,  a  partner  in  the  house  of  Bruce  and  Co.  (the  object  being 
to  save  postage,  as  Simpson  was  an  M.  P.)  Alexander  was  directed,  by 
<  Jooke  and  Co.,  to  get  the  bill  discounted,  and  pay  the  proceeds  to  Bruce 
and  Co.,  for  their  account.  At  that  time,  the  sheriff  was  in  possession 
of  the  shop  and  all  the  property  of  Bruce  and  Co.,  under  an  extent 
against  them,  and  on  the  arrival  there  of  the  parcel  containing  the  letter 
(which  was  not  sealed)  and  the  hill,  the  officer  opened  the  parcel,  and 
took  possession  of  the  enclosure. 

On  these  facts,  it  was  doubted  whether  the  banking  house  of  Bruce 
and  Co.,  had  such  a  property  as  would  support  the  affirmative  of  an 
issue,  that  Hum  was  indebted  to  the  banking  house  in  the  amount  of 
the  bill.(f) 

Another  consideration  is  to  be  mentioned,  for  the  purpose  of  showing, 
that  whatever  may  at  first  sight  appear  to  be  the  case,  there  is,  in  truth, 

.  _  .     when  the  subject  is  correctly  investigated,  no  hardship  upon  the 

'J  banker  implied  in  the  operation  of  the  principle  above  men- 

tioned,  in  rach  circumstances  as  those  of  the  last  case.     The  banker 

voluntarily  assumes  a  character,  in  which  he  holds  himself  out  to  the 

world  a-  ready  to  transact   certain  well-known   olasses  of  monetary   busi- 

for  all  wlm  choose  to  employ  him,  in  consideration  of  reward.     In 

iharaoti  r  he  must  be  taken  to  have  calculated  the  risk  of  losses 

which  he  may  imur,  in  course  ofhis  business,  from  the  imprudence,  the 

carelessness,  the  defaults,  or  the  misfortunes  of  tlmse  whom  necessarily, 

from  the  nature  of  that  business,  he  musl  often  employ  in  the  conduct 

of  it.  and  with  whose  characters,  capacities,  and  positions  in  life,  he  often 
cannot  necessarily  have  any  but  the  slightest,  and  most  imperfect  means 

.  Hex  v.  Born,  B  Price,  173 j  tee  Beck  v.  Bobley,  l  H.  B    .89.  note;  and  on 
r  ■     ••  Jonei  v.  Broailhur-t.  9  C.  B.  L86. 


DEPOSITS    OF    SECURITIES.  149 

of  acquaintance.  He  must  be  taken  to  have  calculated  his  risks,  and 
calculated  also  the  rate  of  reward,  at  which  he  will  encounter  those  risks 
accordingly.  If  he  has  not  done  so,  and  if  he  fails  to  require  such  an 
amount  of  reward  in  his  transaction  of  the  business  of  his  employers,  as 
is  in  fair  proportion  to  the  degree  of  risk  with  which  the  business  is 
attended,  he  fails  to  observe  that  degree  of  vigilance,  in  providing  for 
his  own  interests,  which  the  law  demands,  before  it  lends  its  aid  to  a 
sufferer.  The  banker  is  not  a  gratuitous  agent ;  he  cannot  allege  to  his 
employer; — I  reap  no  advantage  from  the  performance  of  your  business; 
I  have  performed  it  with  the  same  degree  of  zeal  and  caution,  that  I 
should  have  exerted  in  my  own;  and,  therefore,  I  cannot  be  responsible 
for  the  results ;  but  being  paid,  he  must  be  content  to  take  the  known 
risks,  and  must  abide  by  the  results,  whatever  they  may  be. 

The  following  is  a  case,  equally  consonant  with  justice  : — 

A  customer  of  a  bank  accepts  a  bill,  payable  at  the  bank ;  the  bill  was 
drawn  in  favour  of  one  A.,  and  was  casually  lost  by  him.  The  banker 
has  notice  of  the  loss,  but,  nevertheless,  afterwards  discounts  the  bill, 
and  afterwards  debits  *the  customer  with  the  amount  of  the  bill,  r^^n-i 
writes  a  discharge  on  it,  and  hands  it  to  the  customer  as  his  L  -• 
voucher.  These  acts  are  several  acts  of  conversion  by  the  banker,  and 
A.  may  recover  in  trover,  without  any  previous  demand  against  the 
banker.(w) 

Stock,  &c,  of  Customers — Bankruptcy. — Cases  of  fraudulent  dis- 
posal, by  bankers,  of  stock,  &c,  belonging  to  customers,  sometimes 
occur,  in  which  they  have  attempted  to  repair  the  injury  done  to  the 
customers,  by  substituting  securities  of  their  own,  in  place  of  those  with 
which  they  have  improperly  dealt,  but  such  attempts  are,  for  the  most 
part,  wholly  ineffectual,  in  case  of  bankruptcy,  as  against  the  assignees. 

Thus,  where  a  customer  of  a  bank  was  owner  of  16,000?.  Navy  Five 
per  Cent.  Stock,  which  stood  in  the  name  of  one  of  the  partners  of  the 
bank ;  and  the  partner  sold  out  the  whole  of  the  stock,  and  applied  the 
proceeds  to  the  purposes  of  the  banking  house  ;  at  the  same  time  enclos- 
ing in  an  envelope  certain  bonds  belonging  to  the  house,  together  with 
a  memorandum  to  this  effect — Borrowed  and  received  of  J.  Balfour,  Esq., 
(the  customer,)  16,000?.  Navy  Five  per  Cents.,  which  we  promise  to 
replace ;  and  we  have  deposited  with  him,  as  collateral  securities,  these 
bonds  of  the  Earl  of  Oxford  and  Mortimer,  and  others,  which  we  promise 
to  assign  when  required, — and  sealing  up  the  bonds,  and  writing  on  the 
envelope,  "The  property  of  J.  Balfour,  Esq."  This  packet  was  deposited 
in  an  iron  chest,  among  securities  belonging  to  other  customers.  In  the 
evening  of  the  day  before  the  bank  stopped  payment,  this  packet  was 
sent  to  the  customer,  who  then  first  learnt  that  the  stock  had  been  sold. 
But  it  was  held,  that  as  the  possession  of  the  bonds  had  never  been  out 
of  the  bankers  till  the  very  eve  of  the  bankruptcy,  when  the  bankrupts 


could  not  give  a  ^preference,  the  customer  had  no  lien  on  the 
bonds,  but  must  give  them  up  to  the  assignees. (a;) 


[*178] 


(u)  Lovell  v.  Martin,  4  Taunt.  799. 

(x)  Wilson  v.  Balfour,  2  Campb.  580;   see  Adams  v.  Claxton,  G  Yes.  230,  231, 
per  Sir  W.  Grant,  M.  R. 


GRANT    0  N    T  II  1.     I.  A  W     0  I    B  A  N  K  I  N  (J. 

Tith  to  Goods,  dec. — Generally,  a-  to  the  deposit  of  goods  by  way  of 
security,  the  banker  is  bound,  at  common  law.  to  take  care  that  the 

m  depositing  i-  entitled  to  the  goods;  otherwise  the  banker  may  at 
an\  time  be  called  upon  to  surrender  T 1  j * ■  goods,  or  the  value  of  them,  to 
their  real  owner  'JtA  and  a  person,  though  he  come  into  possession  of 
goods  properly,  nevertheless  duo  not  always  take  or  retain  the  right  to 
dispose   of  them;    thus,  if  a   person   !"•   intrusted  with  jewels  in  a  bag 

I.  tc  he  ki  pt  safely  for  the  use  of  the  real  owner,  he  becomes  pos-' 
Bossor  mala  tide,  by  breaking  the  Beals  ;  he  has  no  right  to  the  property, 
and  lie  cannot  transfer  to  the  bankers  more  right  than  he  has  himself. 

Deposits  of  securities  against  Advances,  dec — Having  observed  what 
is  the  .fleet  of  depositing  securities  with  a  banker  for  safe  custody,  or 
ue  Bpecific  purpose,  nut  giving  any  property  in  them  to  the  bankers, 
in  eases  which,  for  the  most  part,  have  arisen,  where  the  customer's 
account  with  the  bank  has  been  in  his  favour,  let  us  proceed  to  investi- 
gate the  effect  of  depositing  securities,  &o.,  when  the  balance  is  against 
him.  and  when  the  object  of  the  deposit  is  to  save  harmless  the  bankers 
against  their  advances  to  the  customer. 

The  following  case  may,  perhaps,  be  fitly  selected  for  leading  notice, 
a-  being  a  transaction  between  two  banks,  and  as  containing  an  important 
principle  for  ascertaining  when  such  securities  are  to  be  held  to  be  in 
tiie  order  and  disposition  of  bankers,  in  the  event  of  their  bankruptcy. 
r*l~<n  *  Policies  of  Insurance. — A.,  being  a  banker  at  Manchester, 
L  "J  had  become  mortgagee  of  certain  policies  of  life  assurance,  the 
various  insurance  offices  interested  haying  notice  of  the  fact.  He  applies 
to  1!..  a  hanker  at  Wirksworth,  for  a  loan  of  money,  offering  to  deposit 
them  and  other  securities,  \c.  This  was  agreed  to,  and  the  deposit  was 
made.  &o.,  but  do  notice  \&  given  to  any  of  the  several  insurance  offices 
interested.  In  bucI  case  these  securities,  notwithstanding  they  were  in 
fact  handed  over  to  1>..  remain,  on  the  bankruptcy  of  A.,  in  the  order 
and  disposition  of  A.  ;  the  title  to  them  docs  not  pass  to  B.,  no  notice 
bavin-  been  given  to  the  insurance  offices  of  the  transfer,  and  A.  con- 
tinuing  to  pay  the  premiums  on  the  policies  for  six  months  after  that 
transfer,  so  as  to  hold  himself  out  as  owner,  (which  was  part  of  the 
circumstani 

Tin-   general   principle   involved  is  now  well   established,  viz.,  when   a 

debt,  due  to  a  trader,  i-  assigned  by  him,  it  remains,  notwithstanding 
rocb  assignment,  in  bis  order  and  disposition,  in  the  event  of  bankruptcy, 

if  nothing   more    is    done   tO   give   publicity  to  the  assignment,  than  the 

mere  delivery  of  the  instrument  creating  the  debt.(«) 

With  respect  to  the  question,  to  whom  shall  notice  be  given  ?  The 
genera]  rule  is  this  -No  notice  of  assignment  of  a  debt  can  be  necessary 
to   any  party,  from    whom    the   trader  is  not  to  receive  payment,  or  who 

Hartop  v.  ffonre,  3  Atl 

i:.  parte  Armstrong,  8  M   D.  ft  D.  <;.  148;   lb  parte  Tennyson,  Mont,  k  Rli. 
rdon  7.  Bast   India  Co.,  1  T.  EL  237  j   K\  parte  Arkwright,  3  M.  D.  k  D, 

(;.  L43 ;  sec-  Ex  parte  Burnett.  De  <;    Bank.  K   194 j  Dean  \.  James   l  A.  &  E 
809. 


DEPOSITS    OF    SECURITIES.  151 

docs  not  hold  any   property  at  the   order   or   disposition    of  the   tra- 
der, (a) 

It  does  not  appear  to  be  intended  to  make  any  distinction  as  to  the 
matter  of  notice  of  assignment,  between  persons  acting  for  themselves, 
and  persons  acting  as  executors  and  trustees  :  if,  as  has  been  stated 
authoritatively, (b)  the  reason  *why  notice  to  one  trustee  has  been  pqgQ-i 
held  sufficient,  is  because  nothing  less  than  inquiry  of  all  the  L  -I 
trustees  would  satisfy  a  prudent  inquirer ;  that  reason  seems  to  apply 
equally,  or,  perhaps,  it  is  more  accurate  to  say,  it  applies  much  more 
strongly,  in  the  case  of  executors,  where  each  may  give  acquittances, 
and  pay  and  receive,  on  account  of  the  estate,  and  where,  although  it  is 
often  found  that  one  only  takes  an  active  part,  yet  there  is  nothing  to 
prevent  any  of  the  others,  at  any  time,  effectually  interfering  in  the 
management  of  the  estate. 

Further,  it  seems,  that  if  notice  had  been  given  to  one  trustee,  who 
dies  without  having  communicated  it  to  the  others,  and  no  new  notice 
had  been  given  to  the  surviving  trustees,  before  the  bankruptcy  of  the 
assignor,  or  depositor,  it  seems  probable  that  the  property  would  be  held 
to  be  within  the  order  and  disposition  of  the  bankrupt,  for  in  such  case, 
inquiry  of  all  the  trustees  would  not  have  led  the  inquirer  to  the  know- 
ledge of  the  assignment. (c) 

In  the  above-mentioned  Manchester  case  (as  it  has  been  in  other  cases,) 
it  was  contended,  in  respect  of  one  of  the  policies  deposited,  that  being 
made  in  the  Equitable  Assurance  Office — a  company,  which  is  a  mutual 
assurance  company,  where  each  person  insuring  is  a  shareholder,  and 
member  of  the  company,  and  therefore  a  partner,  a  formal  notice  of 
deposit  was  not  necessary  in  such  case,  because  notice  to  one  partner  was 
notice  to  all  the  company ;  but  the  vice-chancellor  nevertheless  held 
himself  bound,  under  all  the  circumstances  of  the  case  as  stated,  to 
make  no  distinction  between  the  policy  in  this  company  and  the  others. (d) 

It  is  to  be  remembered,  however,  that  on  a  deposit  of  a  policy  of 
assurance,  by  way  of  equitable  mortgage,  the  onus  *does  not  lie  r*-^gjn 
on  the  mortgagee  to  show,  that  notice  of  the  deposit  was  given  L  J 
to  the  office,  before  the  bankruptcy,  but  with  the  assignees  to  show,  that 
it  was  not;(e)  and  where  a  bankrupt,  being  one  of  the  directors  of  a 
life  assurance  office,  deposits  a  policy,  made  in  that  office,  with  his 
bankers,  one  of  the  bankers  being  also  one  of  the  auditors  of  the  assu- 
rance office,  it  was  considered  that,  in  these  facts,  there  was  sufficient 

(a)  Gardner  v.  Lachlan,  4  My.  &  C.  132,  per  Ld.  Cottenham,  C.  See  further  as 
to  notice  on  assignment  of  debts,  Ex  parte  Burton,  1  Gly.  &  J.  207;  Ex  parte  Os- 
borne, id.  207. 

(b)  Per  Wigram,  V.  C,  1  Hare,  96,  97. 

(c)  Per  Wigram,  V.  C,  1  Hare,  97,  and  see  the  remarks  there  ;  and  per  Sir  E. 
Sugden,  C,  rel.,  1  Connor  &  L.  562,  that  the  same  principle  holds  in  case  of  death 
of  executor. 

(d)  Ex  parte  Arkwright,  3  M.  D.  &  De  G.  143  ;  see  Ex  parte  Wood,  3  M.  D.  & 
De  G.  315 ;  Re  Styan,  2  M.  D.  &  De  G.  219,  213  ;  Thompson  v.  Spieres,  13  Sim. 
469  ;  Ex  parte  Wilkinson,  id.  475. 

(e)  Ex  parte  Stevens,  4  Dea.  &  Ch.  117  ;  Edwards  v.  Scott,  1  M.  &  Gra.  962; 
Tibbits  v.  George,  5  A.  &  E.  107;  see  Ex  parte  Smith,  2  M.  D.  &  De  G.  219 ;  Ex 
parte  Majoribanks,  De  G.,  Bank.  R.  477.  What  not  sufficient  notice  ;  Ex  parte 
Carbis,  4  Dea.  &  Ch.  354. 


152  GRANT    ON    THE    LAW    OF    BANKING. 

notice,  to  tlii'  office,  of  the  transfer  of  the  bankrupt's  interest  in  the 
policy,  to  prevent  th<-  assignees  claiming  the  policy,  as  being  in  the 
reputed  ownership  of  the  bankrupt,  at  the  time  of  the  bankruptcy^/) 
This  decision,  however,  has  been  disapproved  by  Sir  E.  Sugden,  C.,(#) 
and  would  hardly  be  followed  at  the  present  day. 

Policies  of  insurance  against  loss  or  damage  by  fire  are  Dot,  in  their 
nature,  assignable,  nor  can  the  interest  in  them  1m-  transferred  without 
the  express  consent  of  the  office. (/<) 

There  is  no  objection  to  depositing,  as  a  valid  security,  a  policy  of 
marine  insurance,  if  the  proper  Bteps  are  taken. 

If  a  manufacturer,  being  indebted  to  his  bankers,  assigns  to  them  his 
leasehold  premises,  with  all  his  stock  in  trade,  utensils,  and  effects,  and 
also  a  policy  of  insurance,  as  security  for  advances  made,  or  to  be  made, 
with  a  power  of  sale,  and  a  proviso  that  he  shall  retain  possession  until 
default,  but  the  assignment  does  not  comprise  all  the  trader's  property; 
the  execution  of  this  deed,  being  bona  fide,  does  not  constitute  an  act  of 
bankruptcy.^ 

r*"m-n  *When  a  mortgagee  of  a  policy  of  life  assurance  deposit-  it 
■-  -■  with  his  bankers  by  way  of  sub-mortgage,  and  gives  notice  of  the 
sub-mortgage  to  the  insurance  office,  it  is  not  necessary  that  he  should 
give  notice  also  to  the  original  mortgagor,  in  order  to  take  the  securities 
out  of  the  principle  of  reputed  ownership,  on  the  bankruptcy  of  the 
depositor.  (JA 

If  a  trader  deposits  a  policy  of  insurance  with  his  bankers  to  secure 
^  Boating  balance;  signs  a  memorandum  of  the  objects  of  the  deposit, 
and  notice  i-  .riven  of  it  to  the  insurance  office,  and  afterwards  he  takes 
a  partner,  and  opens  a  fresh  account,  with  the  hank,  in  the  name  of  the 
linn,  and  the  policy  remains  in  the  bank,  and  is  treated  as  a  security  for 
the  floating  balance  due  from  the  firm,  but  of  this  change  in  the  object 
of  the  security,  no  memorandum  is  signed,  nor  any  notice  given  to  the 
office,  the  policy  is  nevertheless  not  in  the  order  and  disposition  of  the 
depositor  on  his  subsequent  bankruptcy,  because  the  prior  notice,  render- 
ing it  impossible  to  deal  with  the  policy,  without  making  inquiries, 
effectually  prevents  that  result.(A-) 

A  life  policy  is  deposited  by  the  bankrupt  before  an  act  of  bankruptcy, 

(/)   Bx  [.arte  Waitliman,  4  Dea.  k  Ch.  412  ;  E.\  paid-  Watkins,  2  M.  &  A.  348. 
Beneasey,  l  Connor  &  L.  B.  562.     Generally  knowledge  is  Buffi- 
-  'nut  notice,  Tibbits  v.  <;Vorge,  5  A.  &  E.  107  :  Smith  v.  Smith,  2  Cro.  .v  If.  231. 
(h)  Lynch  v.  DalzelL  4  Hro.  P.  C.  431  ;  Saddlers'  Company  \.  Badcock,  i'  At], 

' 
(i)  Carr  v.  Hurdis?,  i  c.  m.  <fc  U.  443.     See  the  principle  of  Buch  assignment* 
discussed,  Graham  v.  Chapman,  'Jl  L.  J.,  C.  B.  it:;:   Xbungv,  Wand,  22  L   J 
Bxch 

(£)  Ex  parte  Barneti  D<  G.  Bank.  R.  194.  See  there  the  form  of  memorandum 
in  such  case.     At  Law  it  has  been  rnled  thai  of  a  bankrupt  cannot  re- 

cover in  tro\<r  a  policy  of  insurance  effected   by  the  bankrupts  and  deposited  as 
although  no  notice  had  been  given  to  the  office.     Gibson  v.  Overbury,  7 
'.v.  555;  fsee  per  Knight  Brace,  V.  0.,  in  Bi  parte  Pri  ■'-.  ::  M.  l>.  &  D.  G. 
bn(  the  Court  of  Exchequer,  in  Gibson  \.  Overbury,  fully  admitted  the  au- 
thority of  the  cases  cited  above  on  this  subject,  a  the  doctrine  of  notice  : 
and  they  held  that  tie                                         ...  r  tie.  debt  due  upon  the  policy  from 

the  office.    So  Belcher  v.  Campbell,  «  Q.  B.  12. 


DEPOSITS    OF    SECURITIES.  153 

notice  of  the  deposit  not  being  given  till  after  such  act,  and  not  till 
seven  years  after  the  deposit  (but  before  fiat,)  but  it  not  appearing  that 
the  depositor  knew  of  such  act,  the  notice  was  held  sufficient  to  give  the 
depositor  a  good  title,  as  against  the  assignees,  inasmuch  as  the  whole 
was  bona  fide,  and  the  transaction  was  fully  completed  before  the  fiat. 
That  question  arose  under  2  &  3  Vict.  c.  29.(£) 

*In  general,  it  is  a  rule,  with  respect  to  agreements  for  equi-  p,„„, 
table  mortgages,  that  the  circumstances  must  be  such  as  to  relieve  L  -* 
from  all  suspicion  of  collusion  or  fraud,  otherwise  a  sale  of  the  property 
will  not  be  decreed. (m) 

The  notice  of  deposit,  given  to  an  insurance  company,  need  not  be  in 
writing.  (V) 

Where  no  bankruptcy  intervenes,  the  necessity  does  not  arise,  of  notice 
of  the  transfer  or  assignment  being  given  to  the  office,  but  the  mere  de- 
posit of  the  policy,  it  being  the  intention,  at  the  time,  to  give  the  bankers 
a  lien,  will  suffice  to  constitute  them  equitable  mortgagees,  although 
there  be  no  memorandum  of  deposit,  and  even  although  there  be  a  memo- 
randum of  deposit  relating  to  other  policies  of  insurance,  and  deposited 
at  the  time,  but  not  comprising  those  in  question. (o) 

As  regards  the  proper  person  to  give  notice  of  transfer  to,  in  order  to 
bind  an  insurance  company,  the  following  may  be  laid  down. 

All  risks  as  to  whether  notice  has  been  properly  given  to  the  insurance 
company  will  be  avoided,  in  all  probability,  by  acting  on  the  suggested 
rule,(p)  to  give  notice  to  the  officer  representing  the  company,  which,  in 
case  of  an  incorporated  company,  would  be  the  head  or  chairman,  or  the 
directors,  or  the  secretary,  according  to  the  terms  of  the  charter,  or  in- 
corporating statute;  in  case  of  a  joint-stock  company,  would  be  the 
public  officer  of  the  company,  or  secretary,  or  agent  of  the  company, 
according  to  the  terms  of  the  deed  of  settlement,  and  to  the  usual  prac- 
tice of  the  company. 


[*184] 


In  a  case  where  it  was  proved  that  the  company  had  authorized 
*their  agents  to  receive  notices  of  assignments  of  policies,  and 
agreed  that  notices  to  those  agents  should  be  as  valid  as  if  served  on  the 
company  :  it  was  held,  that  knowledge  of  an  assignment  obtained  by  one 
of  their  agents,  not  in  the  shape  of  a  communication  to  the  company,  but 
as  attorney  for  the  assignor  and  assignee,  was  sufficient. (g)  Where 
notice  is  necessary,  it  makes  no  difference,  that  the  particular  company 
have  a  rule  dispensing  with  such  notice. (r) 

[I)  In  re  Styan,  2  M.  D.  &  D.  G.  219 ;  see  Young  v.  Hope,  2  Ex.  105  ;  Re  Pritch- 
ard,  1  Fonbl.  R.  238. 

(m)  Ex  parte  Nunn,  1  Deac.  611. 

(re)  Re  Raikes,  4  Dea.  &  C.  412  ;  Ex  parte  Tanner,  1  Bank,  and  Insolv.Rep.  156  ; 
Ferris  v.  Mullins,  2  De  G.  &  Sm.  386. 

(o)  See  Ferris  v.  Mullins,  2  De  G.  &  Sm.  378. 

(p)  Per  Sir  E.  Sugden,  C,  Ir.,  Ex  parte  Henessey,  1  Connor  &  L.  563 ;  S.  C,  2 
Dru.  &  War.  555.  If  a  bankrupt  is  assignee  of  a  chose  in  action,  and  does  not 
give  notice  of  the  assignment,  his  assignee  must.     Ex  parte  Wood,  3  M.  D.  &  D. 

\q)  Gale  v.  Lewis,  9  Q.  B.  730 ;  see  Wing  v.  Harvey,  18  Jur.  394;   S.  C,  23  L. 
J.  (N.  S.)  Ch.  511 ;  S.  C,  5  De  G.  M.  &  G.  252. 
(r)  Ex  parte  Patch,  7  Jur.  820. 


1 ;,  [  G  K  A  N  I     U  X    TUE     L  A  W     0  F    li  A  N  K  I  X  b. 

Ii  is  v. ty  materia]  for  bankers  to  ascertain,  that  die  deposit  of  a  policy 
.if  insurance  is  made,  in  all  respects,  in  a  proper  and  unobjectionable 
manner;  it'  it  is  not,  the  deposit  may  bo  ineffectual,  as  a  security;  at 

least,  without  an  application  to  the  Court  of  Chancery. 

Thus,  a  certain  banking  house  advances  to  A.  2502.,  on  two  promis- 
sory nnti-,  ami  the  security  of  an  insurance  on  his  own  life  for  1,000/., 
which  he  deposited  with  them.  Now,  this  policy  hail  already  been 
assigned  bj  deed  to  a  third  pei>on,  1!.,  who  had  negligently  left  the 
Instrument  in  the  hands  of  A.  Then  J>.  die-,  ami  his  executor  pays  the 
premiums,  as  B.  had  been  in  the  habit  of  doing,  up  to  the  death  of  A., 
when  the  executor  brings  detinue  against  the  bankers  for  the  policy,  and 
recovers ;  the  bankers  not  being  aide  to  make  out  their  allegation,  that 
B.  had  fraudulently  intended  to  leave,  in  the  hands  of  A.,  the  policy,  in 
order  that  A.  might  have  the  means  of  borrowing  money  of  some  one, 
and  to  cheat  some  one,  by  so  doing.(.sj  Notice  of  the  assignment  had 
been  duly  given  to  the  insurance  office,  but  it  seems,  that,  in  the  usual 
course  of  business,  the  insurance  office  would  have  refused  to  answer  any 
inquiries  that  the  bankers  might  have  made  on  this  point.  The  decision 
was  at  Nisi  Prius,  but  possibly  in  equity  the  bankers  would  be  relieved. 
r*i«"i  *When  the  customer,  by  indenture,  assigned  to  the  bankers  a 
J  number  of  shares  in  a  life  assurance  company,  then  standing,  in 
the  name  of  the  customer,  in  the  books  of  the  company,  subject  to  re- 
demption, on  payment  of  a  sum  therein  mentioned,  and  with  a  power  of 
Bale  and  covenant  for  further  assurance.  The  bankers  gave  the  usual 
notice,  to  the  company,  of  this  indenture  and  the  transfer;  an  entry 
thereof  was  made  in  the  company's  ledger,  the  indenture  of  assignment 
having  been  prepared  in  the  office  of  a  firm,  who  were  the  company's 
solicitors.  The  company  afterwards  refused  to  recognize  this  transfer, 
because  it  had  not  been  made  with  the  formalities  required  in  the  deed 
of  settlement  of  the  company,  of  which  the  assignor  was  a  director,  and 
they  never  removed  the  name  of  the  assignor  from  their  books,  in  which 
these  shares  -till  Stood,  in  Ids  name,  when  he  became  bankrupt.  It 
was  held,  that  the  notice  was  sufficient,  and  that  the  circumstances  suffi- 
ciently show7ed  the  bankrupt  not  to  be  the  reputed  owner  of  the  shares, 
at  the  time  of  the  bankruptcy. (t) 

So,  where  a  director  of  an  insuranoe  companj  executed  an  assignment 

of  hi-  Bhares,  a-  a  security,  to  a  person  who  gave  notioe  to  the  insurance 

company,  though  not  until  some  time  after  the  assignment,  it  was  held, 
that  the  notice  having  been  given  before  the  act  of  bankruptcy,  the 
-hare-  wire  not  in  the  order  and  disposition  of  the  bankrupt,  within  the 
Bankrupt  A.cl  (12  \  13  Vict.  o.  106,  b.  L25,)  and  that  the  assignee  of 
them  had  a  g I  equitable  mortgage.(u) 

(t)  Neale  \.  Ifolineux,  •_'  Oar,  &  K.  672. 

Hi  Bj  parte  Hasterman,  2  M.  .v  A.  209;  thai  then-  woe  in  this  case  no  collusion 

or  fraud,  and   do  tment,  distinguishes  ii   I'mm   Lx  parte  Lancaster 

Canal  Company,  l  Deac.  k  Ch.  411  j  sei  aare    in  a  gas  company,  Ex  parte 

acer,  ■■■  M.  k  A.  607. 

i»/,  Bi   parte  Little lali'.  24   I..  .1.  fV  S.)  Bankr.  :•.  (.me  of  t he  Lords  Justices 

donbting;)  see  Camming  v.  I'm   .,,tt.  2  v.  ,v  Col.  Ex.  Eq.  It.  488.    As  to  what  has 

idered    sufficient  notice,  Ex  parte  Btright,  2  Dca.  &  C.  314;  Smith  v. 


DEPOSITS    OF    SECURITIES.  155 

*The  obvious  mode  to  avoid  all  questions  is,  for  the  bankers,  p^,  ~  fi-. 
in  all  cases  of  deposits  of  policies,  or  shares,  to  take  care  to  give  L  J 
notice  immediately,  and  to  see,  in  the  latter  case,  in  addition,  that  the 
proper  transfer  is  completed,  according  to  the  terms  of  the  statute,  or 
deed  of  settlement,  under  which  the  company  is  constituted. 

Shares  in  a  banking  company  were,  by  the  deed  of  settlement,  to  be 
subject  to  a  lien  on  behalf  of  the  company,  when  the  proprietor  of  them 
became  debtor  to  the  company ;  in  such  case  (the  proviso  being  indorsed 
on  the  certificates  of  the  shares,)  the  latter  are  not  in  the  order  and  dis- 
position of  the  proprietor,  at  the  time  of  his  bankruptcy,  (a?) 

In  the  case  of  an  assignment  of  a  policy  of  insurance,  it  is  not  essen- 
tial that  the  assignment  should  contain  a  declaration,  that  the  receipts 
of  the  bankers  shall  be  sufficient  discharges  to  the  insurance  company ; 
for  that  they  shall  be  so,  is  necessarily  implied,  from  the  nature  of  the 
transaction. (y)  On  the  other  hand,  in  the  case  of  a  mere  equitable  mort- 
'  gage,  by  deposit  of  the  policy,  although  the  assignees  of  a  bankrupt  de- 
positor cannot  recover  back  the  policy,  from  the  bankers,  by  means  of  an 
action  at  law,  yet  if  they  have  claimed  the  debt  in  time,  they  may,  on 
its  being  paid  to  them  by  the  company,  give  a  valid  discharge  to  the 
company  ;(z)  and  thus  the  bankers  would  be  left  without  remedy,  and  so 
would  find  their  security  worthless. 

It  is  hardly  necessary  to  observe,  that  in  either  case,  whether  of  bank- 
ruptcy or  insolvency,  the  residue  (if  any)  of  the  sum  received  by  the 
bankers,  after  the  debt  is  satisfied,  *must  be  paid  over  to  the  ^-.  S7-. 
assignees,  or  provisional  assignee,  and  this  will  be  enforced  in  L  -I 
equity. 

Circumstances,  sometimes,  arise  out  of  assignments,  to  bankers,  of 
policies  of  life  insurance,  in  which  difficult  questions  as  to  interpleader 
have  to  be  settled.  Now,  it  would  lead  too  deeply  into  technicalities,  to 
pursue  this  subject  from  the  beginning;  we  will,  therefore,  state  the 
principal  facts,  and  the  essence  of  the  judgment  in  the  last  case,  which 
has  occurred  previously  to  the  publication  of  this  work,  leaving  it  to  the 
reader  to  refer  to  the  reports  of  the  case  itself,  which  will  put  him  on 
the  path  of  the  prior  decisions  relative  to  the  matter,  and  so  enable  him 
to  discover  whatever  has  been  decided  on  the  subject. 

A.  insured  B.'s  life,  in  the  Atlas  Assurance  Company,  for  3,000?., 
payable  to  A.  on  the  death  of  B.  Immediately  afterwards,  A.  assigned 
the  policy  to  his  bankers,  as  security  for  a  loan  or  advance  (which  was 

Smith,  2  Cro.  &  M.  231 ;  Meux  v.  Bell,  1  Hare,  73  ;  Matthews  v.  Gahb,  15  Sim.  51 ; 
West  v.  Reid,  2  Hare,  249.  What  sufficient  notice  of  deposit  of  railway  shares,  Ex 
parte  Harrison,  3  Deac.  185  ;  Ex  parte  Nutting,  2  M.  D.  &  De  G.  302 ;  8  &  9  Vict.  c. 
16,  s.  18  ;  Ex  parte  Richardson,  3  Deac.  496. 

(x)  Ex  parte  Plant,  4  Deac.  &  C.  164. 

(y)  Per  Ld.  Cranworth,  C,  Dessborough  v.  Harris,  3  Eq.  R.  1058.  There  was, 
in  that  case,  the  usual  power  of  attorney  enabling  the  mortgagee  to  give  receipts; 
S.  C,  id.  1061  ;  and  see  Glynn  v.  Locke,  3  Dru.  &  War.  11 ;  Ottley  v.  Gray,  16  L. 
J.  (N.  S.)  Ch.  512. 

(z)  Gibson  v.  Overbury,  7  M.  &  W.  562.  An  assignment  of  a  policy  of  insurance 
as  security  for  a  debt,  with  a  proviso  for  redemption  on  payment,  is  a  mortgage 
within  55  Geo.  III.  c.  184;  Sched.  pt.  1,  and  therefore  requires  an  ad  valorem 
stamp.     Caldwell  v.  Dawson,  5  Exch.  1. 


150         GRANT  ON  THE  LAW  OF  BANKING. 

■Ian  secured  by  a  mortgage  of  real  property.)  Notice  was  given  to  the 
company  of  the  assignment.  A.,  subsequently,  took  the  benefit  of  the 
Insolvent  Act,  and  all  his  property  vested  in  the  provisional  assignee, 
Then  B.  dies,  and  the  company,  Borne  time  afterwards,  file  a  bill  of  inter- 
pleader  in  equity,  alleging  that  A.,  and  the  pn visional  assignee,  disputed 
the  right  of  the  bankers  to  receive  the  3,000/.,  and  that  the  bankers  had 
commenced  an  action  against  the  company,  in  the  name  of  A.  It 
appeared  that  the  provisional  assignee  refused  his  consent  to  the  bankers 
receiving  the  money,  refusing  also  to  release  the  company,  but  otherwise 
offered  no  opposition,  not  disputing  their  right  to  the  policy,  and  the 
moneys  payable  thereunder,  but  merely  leaving  them  to  make  out  their 
claim.  Lord  Cranworth,  C.,  decided  the  company  to  have  no  right  to 
call  upon  A.,  and  the  bankers,  or  the  provisional  assignee,  to  interplead,^/) 
and  dismissed  the  bill,  with  costs,  as  against  the  bankers  and  the  pro- 
visional assignee.  A  strong  opinion  was  also  expressed,  that  A.  had  no 
r*l««T  Denefic'ial  interest  *in  the  question,  all  his  beneficial  right  of  re- 
L     c  J  demption  having  passed  to  the  provisional  assignee. 

The  result  of  the  above  statements,  which  have  been  made  with  a  view 
of  placing  before  the  reader  the  application  of  the  rules  governing  depo- 
sits of  securities,  and  chiefly  of  policies  of  insurance,  to  varied  combina- 
tions of  facts,  is  to  show  the  great  importance,  to  bankers,  of  providing 
that  every  transaction  of  this  kind  is  fully  completed,  both,  in  other 
respects,  and  by  giving  notice  to  the  insurers  and  others,  so  as  to  take 
the  ease  out  of  the  order  and  disposition  clause,  in  case  of  bankruptcy, 
Ac.  For,  although  where  the  policy  has  been  actually  handed  over,  and 
is  in  the  hands  of  the  bankers,  as  a  security,  for  the  repayment  of  a  pre- 
viously existing  debt,  the  assignees  cannot  recover  the  document  in 
trover,  and  the  bankers'  lien  upon  it  is  said  to  remain  although  no  notice 
has  been  given  of  the  deposit  to  the  insurers,  yet  practically  such  lien,  it 
would  seem,  must  be  of  little  value ;  for  the  assignees  may,  notwith- 
standing, give  a  discharge  to  the  office  for  the  debts,  due  upon  the 
policy,  to  which  the  bankrupt  was  entitled. (/A 

Shares. — As  to  the  effect  of  depositing  railway,  or  other  joint-stock 
company's,  shares  with  a  bank,  by  way  of  security,  for  advances. 

A.  and  B.  were  partners  in  business  as  Bharebrokers,  and  were  also  in 
the  habit  of  buying  and  Belling  shares  in  partnership;  they  dissolved 
partnership  on  the  11th  of  October,  1844,  of  which  their  bankers,  with 
whom  the)  had  opened  an  account  nil  the  14th  of  August,  1844,  had 
notice.  A..  wh<>  was  the  partner  that  attended  to  this  portion  of  the 
business,  had,  previously  to  the  dissolution,  contracted  to  purchae 
comber  of  Bcrip  Bhares,  in  various  railways,  on  account  of  the  firm. 
After  the  dissolution,  he  deposited  some  scrip  certificates  ofthe.se  shares 
o  with  the  bank  ;  they  had  m.t  been  paid  for  at  that  time,  and  he 
-1  obtained  from  the  bank  an  advance  of  money,  on  the  security  of 
them,  f,,r  the  purpose  of  paying  the  purchase-money,  and  he  signed  an 
authority  to  the  bank,  in  the  name  of  the  firm,  empowering  them  to  sell 

(a)  Desshorouyh  v.  Harris,  '!  Eq.  EL  1058. 

',       on  v.  Oveibiirv.  7  M.  ,\;  \V.  561,  562  :  see  Joyce  v.  De  Moleyns,  2  J.  &  L. 
i       irte  Price,  3  M.  1>.  fc  D.  <;.  r>9l. 


DEPOSITS    OF    SECURITIES.  157 

the  shares,  if  the  money  were  not  advanced,  within  a  certain  time.  B. 
then  institutes  a  suit  in  Chancery,  against  A.  and  the  bankers,  praying 
a  declaration  that  B.  was  not  bound  or  affected  by  the  deposit  of  the 
shares,  on  account  of  the  firm,  or  by  any  of  the  dealings  and  transac- 
tions which  took  place  with  the  bank,  after  the  dissolution  of  the  partner- 
ship, &c. 

The  court,  however,  held,  that,  looking  to  the  nature  of  the  trade, 
which  was  that  of  buying  and  selling  j  that  the  shares  were  not  like  land 
or  property,  to  be  retained  and  used  by  the  firm ;  that  the  debt,  in  respect 
of  the  shares,  was,  from  its  nature,  one  which  must  be  immediately  due ; 
that  A.  was  authorized,  by  B.,  to  purchase  the  shares;  that  his  only 
alternative  was  to  complete  the  purchase,  by  paying  for  the  shares,  or  to 
resell;  he  had  authority,  notwithstanding  the  dissolution,  to  do  the 
former,  by  raising  money  as  he  did,  and  to  empower  the  bankers  to  sell, 
in  default  of  repayment. (c) 

The  customer,  in  a  case  where  the  Liverpool  Albion  Bank  were  the 
bankers,  to  secure  an  advance  made  to  him,  deposits  certificates  of  shares 
in  a  railway  company,  (which  shares,  by  the  provisions  of  the  railway 
act,  could  only  be  transferred,  by  an  instrument,  of  a  prescribed  form,) 
together  with  all  instruments  of  transfer,  in  the  prescribed  form,  except 
that  the  blank,  for  the  transferee's  name,  was  left  unfilled.  The  bank 
gave  notice  of  their  lien  to  the  secretary  of  the  railway  company.  It  was 
held,  although  the  private  act,  constituting  the  company,  expressly 
excluded  persons,  claiming  by  any  other  title  than  the  mode  pointed  out 
in  the  statute,  (which  had  not  been,  in  all  respects,  complied  with 
*here,)  from  any  part  or  share  in  the  profits  of  the  undertaking,  p-^Q-i 
that  the  bank  had  a  lien  on  the  shares,  and  that,  having  paid  L  J 
certain  calls  in  respect  of  them,  they  were  entitled  to  add  these  sums  to 
the  amount  already  advanced,  and  that  their  lien  extended  as  a  security 
for  the  whole  amount.  (cZ) 

Dock  Warrants. — A  deposit  of  dock  warrants,  duly  indorsed,  is  a 
good  security ;  for  the  property  in  the  goods  passes  by  the  delivery  of 
the  warrants,  which  empower  the  holder  to  obtain  actual  possession  of 
the  goods. (e)  So  bills  of  lading,  expressed  to  be  made  out  to  the  order 
of  the  shipper  or  his  assigns,  transfer  the  ownership,  so  as  to  enable  to 
take  into  possession ;  but  not  so  as  to  bring  an  action. (/) 

It  is,  perhaps,  hardly  necessary  to  state,  that  a  deposit,  expressly  made, 
as  a  security  for  a  specific  portion  only  of  a  general  balance,  precludes 
the  admissibility  of  any  inference,  that  it  was  intended,  as  a  security,  for 
the  whole  of  the  general  balance. [g) 

When  securities  are  assigned  to  A.  and  B.,  bankers  and  copartners, 
for  moneys  to  be  advanced  by  them,  or  either  of  them,  to  the  assignor, 

(c)  Butchart  v.  Dresser,  10  Hare,  453 ;  affirmed,  4  De  G.  M.  &  G.  542. 

(d)  Ex  parte  Dobson,  2  M.  D.  &  D.  G.  685  ;  see  8  &  9  Vict.  c.  16,  s.  18.  See 
as  to  invalidity  of  deed  executed  in  blank,  Hibblewhite  v.  M'Morine,  6  M.  &  W. 
215. 

(e)  Lucas  v.  Dorrien,  1  J.  B.  Moo.  29. 

(/")  Thompson  v.  Dominy,  14  M.  &  W.  403. 

(g)  Vanderzee  v.  Willes,  3  Bro.  Ch.  C.  21  ;  see  Ex  parte  Vere,  4  Deac.  &  C. 
321. 


158  ('.RANT    ON    THE    LAW    01      BANKING. 

and  A  survives  !>.,  it  has  been  decided  that,  as  the  security  was  made 
to  the  two  jointly,  A.  could  give  a  sufficient  discharge,  for  the  whole 
aim mnt,  due  on  the  security. (/<) 

TtiU   Deeds. — With  respect  bo  the  deposit  of  title  deeds,  it  is  desirable 
be  the  principal  results  of  bhe  decisions,  many  of  which  teud  to 
show,  that  hankers  have  acted  at     tiimsiii  such  cases,  as  though 
L     l    J  they  were  inopet  consilii,  and  have  suffered  accordingly. 

Two  trader-,  in  partnership,  having  had,  for  many  years,  an  account 
with  a  bank,  deposit  with  them  certain  title  deeds  of  an  estate,  belong- 
ing to  one  of  the  partners  separately,  as  a  security,  for  the  balance  which 
might  be  due  to  the  bank,  from  bhe  firm,  from  time  bo  time,  upon  the 
account  current.  No  written  memorandum  was,  at  that  time,  made  of 
the  object  of  the  deposit,  but  afterwards,  upon  a  further  advance  by  the 
bank,  the  owner  of  the  title  deeds  signed  a  letter,  or  memorandum, 
stating  the  deposit  to  be  for  securing  that,  as  well  as  future,  advances. 
The  banking  tirm  had  some  changes  made  in  its  members  after  the 
deposit  was  made,  and,  in  point  of  fact,  all  the  advances  made  by  the 
hanking  firm,  with  whom  the  deposit  was  made,  had  been  paid  off  by  the 
traders  ;  but  fresh  advances  were  made  by  the  new  banking  firm,  who 
continued  to  hold  the  deeds ;  it  was,  nevertheless,  held  that  the  security 
was  a  continuing  security,  and  that  the  banking  firm  was  equitable  mort- 
ee  of  the  estate  bo  the  amount  of  their  advances. (/) 

As  between  the  bank  and  the  general  creditors  of  the  bankrupt,  who 
has  deposited  title  deeds  with  them  before  bankruptcy,  the  bank  has  the 
priority  ami  the  best  title;  although  bhe  deeds  deposited  were  old  di 
not  including  bhe  conveyance  from  the  depositor's  vendor,  but  the  inten- 
tion of  the  deposit  undoubtedly  being  to  create  a  lienj  that  is,  the  bank 
are  equitable  mortgagees  against  bhe  general  ereditors.(&) 

Title  deeds  of  a  Leasehold  estate  are  deposited  with  hanker-,  byway  of 
equitable  mortgage,  for  securing  the  balance  of  a  customer's  running 
account.  Be  is  then  convicted  of  felony.  The  Court  of  Exchequer  in 
Equity  had  no  jurisdiction,  as  the  legal  estate  is  in  the  crown,  to  decree 
a  ude  of  the  i  state,  nor  any  power  to  compel  a  conveyance,  by  the  crown, 
r*iQ9i  °^  tu'J  ''  '-1'  estate,  hut  only  to  declare  the  hank,  as  equitable 
L  J  mortgagees,  entitled  bo  held  possession  afthe  property,  until  bhe 
crown  should  think  lit  to  redeem  the  mortgage//) 

A  Bale  would  be  decreed,  m  a  case,  where  the  orown  had  only  an 
egvitablt  interest.(m) 

it  is  to  be  observed,  that  the  deposit  must  be  made  at  such  a  time, 
and  iii  Bucb  circumstances,  as  to  be  free  from  suspicion,  otherwise  bhe 
hank  will  not   be  allowed  tlie  advantage  of  bhe  character  of  equitable 

.  9  Sim.  1. 
i    EEi  p        Smith,  'J  K.  i».  .v  De  <:.  314. 
Bj  parte  [aeon,  l  Bank.  A  in-.  i:.  L07. 

Bodge  v.  An.  c.  a.. :;  JT.A  0.  Ex.  342.     A-  to  time  Brum  which  the  equitable 
-  entitled  to  the  produce  of  the  mortgaged  estate,  Bj  parte  Smith,  3  M. 
D.  .v  i.\  parte,  Tagart,  De  Qt.  Bank.  Jt.  631;  Ex  parte 

Barclay,  5  De  G.  U    t  G.  W3j    12  k  13  Vi.i.  c.  106.  ;.  L26. 

(m)  Prescott  v.  Tyler,  1  Jur.  470  ;  see  3  Y.  k  ('.  Exch.  346;  Ex  parte  Tyson,  1 
Jnr.  472. 


DEPOSITS  OF  SECURITIES.  159 

mortgagee;  thus,  where  the  deposit  of  a  lease  was  made  on  the  lGth  of 
April,  and  the  fiat  in  bankruptcy  issued  on  the  2nd  of  May,  the  petition 
of  the  equitable  mortgagee  was  refused  with  costs  :(n\  and  there  must 
be  an  actual  deposit  to  constitute  an  equitable  mortgagee ;  an  order  on  a 
third  party  to  deposit  a  lease  when  executed  is  not  sufficient. (o\  Also, 
the  deposit  ought  always  to  be  accompanied  by  a  written  memorandum 
of  the  object  and  purpose  for  which  it  is  made,  among  other  reasons, 
with  a  view  to  costs ;hi)  though  this  last  consideration  is  now  less 
important  perhaps  than  it  was  a  short  time  ago.  At  any  rate,  as  regards 
costs,  the  decision  will  be  adverse  to  the  equitable  mortgagee  where  a 
written  memorandum  has  been  lost,  so  far  as  regards  the  costs  occasioned 
by  such  loss.  (2) 

In  general,  however,  assignees  of  a  bankrupt  are  entitled  to  apply  to 
the  court,  for  directions,  in  cases  of  equitable  mortgage,  and  therefore, 
even  in  a  clear  case,  where  the  assignees  are  requested  by  the  bankers, 
who  hold  an  equitable  ^mortgage,  to  consent  to  a  sale  of  the  pro-  r^-i0qT 
perty,  without  putting  the  bankers  to  the  expense  of  petitioning,  L  J 
the  assignees  will  have  the  costs  of  the  proceeding  out  of  the  mortgaged 
estate. lr\  And  it  has  lately  been  intimated  by  the  Court  of  Appeal  in 
Chancery,  that  the  previous  practice  as  to  costs,  namely,  that  an  equi- 
table mortgagee,  by  a  mere  deposit,  paid  the  costs  of  the  petition,  but 
that  a  memorandum  entitled  him  to  his  costs  out  of  the  proceeds  of  the 
sale  of  the  mortgage,  was  incorrect ;  and  in  the  case  before  the  court, 
which  was  an  appeal  by  an  equitable  mortgagee,  from  a  decision  of  a 
commissioner,  which  the  court  reversed,  they  ordered  the  petitioners' 
costs  of  appeal  to  be  paid  out  of  the  estate,  and  all  other  costs  to  be 
added  to  their  security. (s) 

The  prudence  and  propriety,  with  a  view  to  preventing  disputes,  and 
removing  all  ground  for  question  and  litigation,  has  been  pointed  out,  of 
always  taking  a  memorandum  of  the  object  and  purpose  for  which  the 
deposit  was  made,  and  numerous  instances  have  occurred,  in  which 
much  delay,  in  realizing  the  securities,  would  have  been  saved  to  bankers, 
if  their  advisers  had  been  duly  alive  to  these  considerations ;  and  although 
it  has  lately  been  held,  as  already  pointed  out,  that  the  former  practice, 
which  made  a  difference  between  the  costs  of  the  usual  order  for  sale,  &c, 
when  there  was  a  memorandum  of  deposit,  and  when  there  was  none,  is 
no  longer  to  be  observed,  yet  that  alteration  does  not  weaken  the  force 
of  the  above  considerations,  or  make  it  prudent  to  neglect  to  take  the 
course  recommended  on  these  grounds.     For  it  has  been  laid  down,  that, 

(n)  Ex  parte  Morgan,  1  M.  D.  &  De  G.  116 ;  see  also  Ex  parte  Gillet,  3  M.  D.  & 
De  G.  458;  Ex  parte  Clouter,  3  M.  D.  &  De  G.  167. 

(0)  Ex  parte  Perry,  3  M.  D.  &  De  G.  252. 

{p)  Ex  parte  Rogers,  3  M.  D.  &  De  G.  297  ;  Ex  parte  Ford,  id.  457;  Ex  parte 
Gillet,  3  M.  D.  &  De  G.  458  ;  see  De  G.  Rep.  194. 

(q)  Ex  parte  Rogers,  3  M.  D.  &  De  G.  297  ;  but  see  now  Ex  parte  Barclay,  5  De 
G.  M.  &  G.  417. 

(r)  Ex  parte  Stevens,  3  M.  D.  &  De  G.  317.  As  to  form  of  order  in  case  of 
bankers  being  equitable  sub-mortgagees,  see  Ex  parte  Powell,  De  G.  R.  405  ;  Ex 
parte  Burdiss,  id.  406,  n. 

(s)  Ex  parte  Barclay,  5  De  G.,  M.  &  G.  417. 

January,  1857. — 12 


Q BANT    ON    THE    LAW    OF    BANKING. 

in  doubtful  oases,  where  then'  is  no  memorandum,  the  court  Leansagaiaet 

considering  the  deposit  as  securing  antecedent  debts.(t*)     At  the  same 

time,  it  is  not  meant  to  Buggest,  that  a  deposit,  without  a  written  memo- 

randum,  is  invalid;  that  notion  is  inconsistent  with  the  *dootrine 

I  J  of  the  .nun-;  for  it  is  held,  that  a  written  memorandum  of 
deposit  is  not  essential  ;  and  that  there  may  be  a  valid  deposit  in  equity 
without  a  word,  at  least,  when  tin-  possession  of  the  securities  cannot  !><• 
accounted  for  in  any  other  way.  the  holder  being  a  stranger  to  the  title 
and  to  thedeeds.(u)     What  is  indispensably  necessary  is,  that  the  bankers 

should  have  actual  possession  of  the  securities.).')  An  instance  will 
show  this  more  clearly  than  mere  assertion  can  do. 

A  memorandum  of  deposit  of  securities  is  handed  to  a  hanker,  stat- 
in- that  a  policy  of  insurance,  on  the  life  of  the  depositor,  had  been 
deposited  with  the  banker;  hut.  in  fact,  the  deposit  is  never  actually 
made,  and  the  policy  remains  in  the  hands  of  the  depositor,  and  i- 
found  in  his  chest  at  the  time  of  his  bankruptcy.  What  then  is  the 
result?  The  transaction  is  wholly  illusory,  as  regards  the  hankers; 
for  the  court  held,  that  the  property  in  the  policy  passed  to  the  assignees 
of  the  bankrupt,  and  consequently  the  only  resource  for  the  bankers 
would  he  to  come  in,  among  the  general  creditors,  and  prove  their  debt.(y) 

<  >n  the  other  hand,  an  agreement  to  give  a  mortgage,  and  the  delivery 
of  title  deeds  for  the  purpose  of  having  the  agreement  carried  into  effect, 
constitutes  an  equitable  mortgage  ;(z)  but  the  mere  casual  possession  of 

title  deeds. (-/j  does  not. 

A  trader  deposits  certain  leases  of  premises,  accompanying  the  deposit 
with  a  memorandum,  statin-  that  the  depositees  were  to  be  equitable 
.,  mortgagees  of  the  Leases, and  premises,  *and  fixtures, and  appur- 
J  tenances,  as  security  for  a  debt.  The  trader  continues  in  posses- 
sion of  the  premises,  &c.,  comprised  within  the  memorandum,  and  becomes 
bankrupt. 

The  depositees  petition  in  bankruptcy  for  the  realization  of  their  secu- 
rity. The  leases,  and  trade  and  other  fixtures  and  fittings  up,  are  sold 
under  an  order.  The  Lord  Chancellor  decided,  on  appeal  from  the  com- 
missioner,  that  the  depositees  were  entitled  to  the  proceeds  of  the  whole, 
without  excepting  the  trade  fixtures,  which  he  held  not  to  be  in  the 
order  and  disposition  of  the  trader,  bo  as  to  pass  to  the  assignees  within 
12  &  13  Vict.  o.  L06,  s.  L25,  and  the  costs  of  the  petition  were  ordered 
to  be  added  to  the  security  of  the  depositees.^ 

A  person  deposits  with  his  bankers  the  title  deeds  relating  to  certain 

(/)  Bj  parte  Martin,  i  Deac.  &  C.  457. 

Bozos  '•'•  William-.  3  Y.  &  J.  L50  :  Bee  l  I  V.  -.  606  ;  IT  id.  230;  19  id.  258; 
Chapman  v.  <'Ii.ipiii.ui,  20  L.  J.  (N.  S.)  Chanc.  465 ;  see  however  Lucas  v.  Dorrien, 
l  .).  II.  Moo.  29. 
i/)  It  has  been  gravely  doubted  whether  goods,  in  the  possession  of  third  par- 
,ii  be  jaid  to  be  in  the  possession,  order  and  disposition  of  the  bankrupt  at 
all.     Per  Rolfe,  B.,  Price  v.  Groom,  2  Exch.  547. 
i...  parte  Halifax,  2  M.  D.  k  De  G.  544. 

Bockley  v.  Bantock,  i  Buss.  141  j  Keys  v.  Williams,  3  V.  k  Col.  Ex.  Bq.  55. 
'     Dorrien,  1  J.  B.  Moo.  29;  Bussel  v.  Russel,  1  Bro.  Ch.  0.  269;  see 

•7. 

1.-  parte  Gawan,  26  L.  J-.  Hank.  Cases,  1. 


DEPOSITS    OF    SECURITIES.  1G1 

steam-mills,  cottages,  land,  buildings,  and  machinery,  of  which  he  was 
possessed,  for  an  estate  in  fee  simple.  The  original  memorandum  of  de- 
posit was  not  forthcoming,  but  a  draft  of  it  was  proved,  and  it  purported 
to  be  made  for  securing  to  the  bank  all  moneys  then  owing  to  them  by 
the  depositor,  and  which  should  in  future  be  advanced  to  him  by  them, 
together  with  bankers' commission,  and  all  other  usual  charges,  and  also 
all  balances  which  should,  at  any  time,  be  due  from  the  depositor  on  his 
banking  account,  together  with  interest  for  the  same,  after  the  rate  of  5/. 
per  cent,  per  annum.  After  the  date  of  the  deposit,  the  depositor 
erected  buildings  for  crushing  bones,  and  also  for  crushing  oil  seeds, 
with  the  necessary  machinery  and  steam-engine,  all  affixed  to  the  free- 
hold. This  was  held  to  be  an  equitable  mortgage,  giving  a  lien  on  the 
fixtures,  whether  erected  before  or  after  the  time  of  the  deposit,  and  in- 
cluding those  that  were  removable  as  between  landlord  and  tenant,  (cj 

A  similar  deposit  of  a  lease  would  operate  as  an  equitable  mortgage  of 
all  fixtures,  although  erected  for  the  purposes  *of  trade,  and  there-  r*-|Qp-i 
fore  removable  as  between  landlord  and  tenant ;  and  although  L  J 
the  fixtures  are  not  specified  in  the  lease,  or  in  the  memorandum  of  de- 
posit.^/) 

In  cases  of  equitable  mortgages,  by  manufacturers,  questions  some- 
times arise  as  to  the  passing,  under  the  deed,  of  the  machinery,  &c.  The 
following  cases  exemplify  the  principle  that  has  been  adopted  for  the 
decision  of  such  questions. 

A  customer  of  a  bank,  being  owner  as  well  as  occupier  of  a  freehold 
cotton  mill,  executed  to  the  banker  a  mortgage  in  this  form  :  viz.,  the 
customer,  by  indenture,  "  demised  and  assigned  unto  the  banker  certain 
plots  of  land,  factories,  mills,  warehouses,  erections,  and  buildings, 
together  with  the  steam-engines,  and  also  all  and  singular  other  the 
movable  and  fixed  machinery  and  steam  pipes  then  in,  upon,  about,  and 
belonging  to  the  said  steam-mills  and  premises,  or  occupied  or  used  there- 
with, to  hold  to  the  said  banker,  &c,  for  900  years,  for  securing  the  re- 
payment of  the  moneys  then  owing  from  the  customer  to  the  banker,  or 
thereafter  to  become  due,  not  exceeding  in  the  whole  5,000^.,  with  inter- 
est at  hi.  per  cent.  •"  with  a  power  to  the  banker  to  sell  and  dispose  of 
the  premises,  for  better  realizing  and  securing  the  said  principal  moneys 
and  interest. 

The  mortgagor  continued  in  possession  of  the  mill,  &c,  up  to  the  time 
of  his  bankruptcy.  In  this  case,  not  being  one  in  which  a  tenant  had 
put  up  the  machinery,  &c,  but  the  case  of  an  owner,  who  had  himself 
erected  all  the  works,  it  was  considered  that  all  such  parts  of  the  ma- 
chinery as  were  legally  attached  to  the  freehold,  passed  with  the  freehold 
to  the  mortgagee,  and  were  not  goods  and  chattels  going  to  the  assignees 
of  the  bankrupt,  (e) 

(c)  Ex  parte  Price,  2  M.  D.  &  De  G.  518  ;  Ex  parte  Lloyd,  3  Deac.  &  C.  765. 

(d)  Ex  parte  Broadwood,  1  M.  D.  &  De  G.  631;  Ex  parte  Cowell,  17  L.  J.  (N. 
S.)  Bank.  16;  Ex  parte  Bentley,  2  M.  D.  &  De  G.  591.  As  to  utensils  not  fixed,  it 
has  been  held  that  a  lease  of  a  house  with  movable  chattels  is  no  lease  of  the 
chattels,  but  a  gift  of  them  during  the  term,  per  Burnett,  J.,  Ryals  v.  Rowle,  cited 
Report,  9  Bli.  (N.  S.)  390. 

(e)  Ex  parte  Wilson,  4  Deac.  &  C.  143 ;  see  25  L,  J.,  Q.  B.  281. 


],;•>  RANT    ON    THE    LAW    OF    BANKING. 

*An  equitable  mortgagee,  by  deposit,  is  not,  in  general,  as 
L  J  snch,  entitled  to  demand  a  legal  mortgage  to  be  made  tohim,(/) 
unless  there  is  a  contract  that  one  ahall  1"'  made  ;(//)  in  that  case,  the 
bankers  will  be  considered,  in  equity,  to  be  purchasers  tor  good  conside- 
ration within  27  Eliz.  o.  1.  in  reaped  of  the  balance  due  to  them,  against 
a  prior  voluntary  settlement. (A)  Nevertheless,  at  law,  the  trustees  of 
the  settlement  may  recover  the  deeds,  in  trover,  from  the  bankcrs.(<) 

A  deposit  of  title  deeds,  prima  facie  creates  an  equitable  mortgage 
upon  the  whole  property  comprised  in  them;  and  further,  where  the 
memorandum  of  deposit  stated  it  to  have  been  made,  with  the  object, 
that  tin-  deeds  should  remain  in  possession  of  the  depositee,  till  such 
time  as  the  depositor's  account,  due  to  the  depositee,  did  not  exceed  the 
sum  of  100?.,  at  which  time  they  were  to  be  restored  to  the  depositor, 
free  of  expense,  and  the  depositor  died  indebted  to  the  depositee  in 274?., 
it  was  decided  that  the  lien  extended  to  the  whole  274/. (7) 

An  equitable  mortgagee,  by  deposit,  of  a  lease,  is  not  bound,  at  th>- 
suit  ,,///,,  lessor,  t<>  take  a  legal  assignment  of  the  lease,  nor  is  he  liable 
to  the  covenants  of  the  lease. (/.)  for  there  is  no  privity  between  him  and 
the  lessor,  until  he  has  made  himself  legal  assignee;  and  so  to  hold, 
•  ■  would  effectually  prevent  anybody  from  ever  taking  a  deposit  of  a  lease, 
as  a  security  tor  a  sum  of  money,  for  no  man  in  his  senses  would  take  a 
deposit  of  a  lease,  if  he  were  thereby  to  render  himself  liable  to  the  cove- 
nants of  the  lease. "(fy 

What  an  equitable  mortgagee  is  entitled  to,  at  the  hands  *of 

L        J  the  court,  is  either  a  foreclosure,  or  a  sale,  at  his  option,(?)  but, 

neral,  the  mortgagor  may  have  allowed  him  six  months'  time,  in 

Which    to    redeem    the    deposited   deeds. (»l) 

If  the  hanker  having  such  equitable  mortgage,  by  deposit  of  the  title 
deeds,  of  an  estate  in  fee,  enter  into  receipt  of  the  rents  of  the  mortg 
estate,  Buch  rec<  ipt  amounts  to  a  payment,  prima  facie,  either  of  the 
principal  or  interest  of  the  debt,  as  the  case  may  be,  so  as  to  take  the 
oul  of  the  Statute  of  Limitations;  and  therefore,  where  the  mort- 
gagor  was  dead,  it  was  considered,  in  such  a  case,  that  the  hankers  had 
probably  a  righi  to  have  the  estate  sold,  the  proceeds  to  be  applied  in 

(/)  Parker  v.  Housefield,  2  My.  k  K.  419;  Metcalfe  \.  Archbp.  of  Fork,  1  My.  & 
1  edit.)  -' i  1  '-a-  v.  Mitchell,  is  Yes.  loo,  com- 

I  nrith  5  Dare,  291. 
Seton,  Decrees,  (2nd  edit.)  213. 
Lister  v.  I  ee  11  M.  &  W.  531. 

Cerrison  v.  Dorrien,  9  Bing.  76. 
\     ton  v.  Dalton,  -  ''ell.  1:.  565 ;  and  1  interest. 

Ho<   .        dreg,  -  Phill.  7 1 7.    Semb.  mere  equitable  charge  of  leasel 
erty,  without  change  of  pot  1  0  forfeiture,  under  ;i  clause  against 

assignment     Bo 


DEPOSITS    OF    SECURITIES.  103 

payment  of  the  debt,  and  to  come  in,  as  general  creditors,  for  the  bal- 
ance.^) 

It  is  to  be  borne  in  mind,  however,  that  if  a  banker  being  equitable 
mortgagee  of  land,  takes  upon  him  to  assume  the  right  of  taking  posses- 
sion, without  applying  to  a  court  of  equity  for  leave  or  direction  to  do  so, 
aDd  unreasonably  and  unnecessarily  for  the  purpose  of  defending  any 
right  given  him  by  his  mortgage,  defends  an  action  at  law  brought 
against  him,  in  consequence  of  his  so  acting,  and  is  unsuccessful  in  his 
defence,  he  will  not  be  allowed  the  costs  out  of  the  mortgaged  estate.(o) 
In  general,  an  equitable  mortgagee  is  not  entitled  to  the  rents  and  profits 
prior  to  the  date  of  the  order  of  sale.(p) 

*An  equitable  mortgage  may  be  established  by  means  of  r*igcn 
written  documents,  coupled  with  parol  evidence,  against  a  prior  *- 
voluntary  settlement, (q)  but  an  equitable  mortgagee  will  not  be  preferred 
to  a  subsequent  legal  mortgagee,  who  has  no  notice  of  the  equitable 
mortgage,  and  the  onus  lies  upon  the  former,  claiming  a  priority,  to  prove 
that  the  latter  had  such  notice. (V) 

In  reference  to  questions  respecting  freehold  or  leasehold  security,  it 
may  be  well  to  point  out,  that  the  deposit  of  the  lease  of  a  house,  or  of 
deeds  of  conveyance  of  a  house  and  furniture  to  the  depositor,  does  not, 
by  any  means,  necessarily  extend  to  charge  the  furniture  in  the  house. 

Thus,  where  A.  deposits  with  B.,  as  security  for  a  debt,  certain  deeds 
of  lease  and  release,  by  which  a  freehold  house  at  Bognor,  and  the  fur- 
niture therein,  were  conveyed  and  assigned  to  A.,  and  the  memorandum 
of  deposit  was  «  Herewith  I  hand  you  the  title  deeds  of  my  Bognor  es- 
tate, to  be  held  by  you,  &c. ;"  these  words  were  decided  not  to  extend  to 
the  furniture,  which,  under  them,  did  not  pass  to  B.,  nor  did  any  inter- 
est in  the  furniture.  If  it  had  been  the  intention  that  the  furniture 
should  be  included  in  the  security,  B.  ought  to  have  taken  care  that  A. 
so  expressed  his  memorandum  of  deposit,  as  to  include  the  furniture,  and 
that  a  schedule  was  added  enumerating  the  different  articles. (s) 

It  seems,  however,  that  when  a  lease  of  a  house  is  deposited,  on  the 
sale  of  the  lease  and  goodwill  of  a  business,  established  in  it,  the  deposi- 
tee is  entitled  to  the  whole  of  the  price,  whether  it  be  considered  to 
arise  from  the  goodwill,  or  from  the  value  of  the  lease,  independently  of 
the  good-will. (?) 

A  parol  agreement,  that  when  a  lease  shall  be  granted,  &c,  it  shall  be 
deposited,  as  security,  for  a  sum  advanced,  *does  not  constitute  r*9()0"l 
an  equitable  mortgage,  (m)  though  an  agreement  to  mortgage  real  L  J 

(n)  Brocklehurst  v.  Jessop,  7  Sim.  438  ;  see  Seton,  Decrees,  (2nd  edit.)  188,  211, 

To)  Dryden  v.  Frost,  3  My.  &  C.  670  ;  see  Ex  parte  Fletcher,  Mont.  E.  454. 

(p)  Per  Ld.  Eldon,  C,  Ex  parte  Alexander,  2  Gly.  &  J.  275;  Ex  parte  Bignold, 
4  Dea.  &  C.  259  ;  see  Ex  parte  Cocks,  3  Dea.  &  Ch.  8.  As  to  sale,  see  2  Dea.  &  C. 
60,  61,  59.     As  to  insolvency,  Garry  v.  Sharratt,  10  B.  &  C.  718. 

(g)  Ede  v.  Knowles,  2  Y.  &  Col.  Ch.  R.  172. 

(r)  Ex  parte  Hardy,  2  Dea.  &  C.  393. 

(s)  Ex  parte  Hunt,  I  M.  D.  &  De  G.  139. 

(t)  Chissum  v.  Dewes,  5  Russ.  29.  Decree  for  sale  of  lease,  Setou,  Decrees, 
(2nd  edit.)  212. 

(u)  Ex  parte  Coombe,  4  Mad.  249. 


]  '1  chant    OS    THE    law    OF   BANKING*. 

estate,  followed  ap  ly  a  sul>st'.|tn-rit  deposit  of  title-deeds  of  the  estate, 
will  amount,  in  equity,  to  a  mortgage,  and  will  be  effectual  from  the  date 
of  th<'  agreement. (a  | 

[f  a  mortgagee,  tor  a  term  of  500  years,  deposits  with  a  banker  the 
mortgage  deed,  as  security  for  8002.,  and  interest,  and  afterwards  pur- 
chases,  of  the  mortgagor,  the  equity  of  redemption,  there  being  no  me- 
morandum of  deposit,  and  afterwards  becomes  bankrupt,  &c.,  the  whole 
of  the  bankrupt's  interest  in  the  property  must  be  sold,  and  the  assignees 
must  join  in  the  conveyance  to  the  purchaser,  (y) 

When  the  deposited  documents  arc  title-deeds,  which  have  been  de- 
posited  with  the  customer  by  a  third  party,  with  a  written  memorandum 
of  the  object  of  their  deposit  with  him,  it  is  not  necessary,  to  constitute 
a  valid  and  equitable  sub-mortgage  to  a  banker,  that  the  original  memo- 
randum should  also  be  deposited. (2) 

A  memorandum,  in  writing,  of  deposit,  which  states  the  deposit  to  be, 
for  the  purpose  of  securing  any  sum  or  sums  of  money  which  may  be 
advanced  by  the  banker,  does  not  necessarily  prevent  the  Becurity  from 
applying  to  past  advances,^)  and  if  a  specific  sum  be  mentioned  in  it, 
the  amount  may  be  increased  by  a  subsequent  verbal  agreement. U>) 

A  banking  house,  in  consideration  of  an  existing  debt,  and  of  a  further 
advance  of  money  to  a  customer,  obtained  from  him  a  deposit  of  all  the 
title-deeds  of  certain  freehold  and  copyhold  lands  of  which  he  was  seised, 
with  a  written  memorandum,  signed  by  him,  regularly  charging  the  lands 
■  .,Mi-i  *with  payment  of  the  whole  debt  and  interest.  Other  creditors 
I  subsequently  recovered  judgment  against  him,  and,  under  1  &  '2 
Vict.  c.  110,  s.  13,  sued  out  elegits,  under  which  the  sheriff  delivered  to 
them  the  whole  of  the  land.  The  bankers,  having  filed  a  bill  in  chan- 
cery, praying  thai  tiny  might  be  declared  to  have  an  equitable  mori 
upon  the  land,  and  to  be  entitled  to  priority  over  the  elegits  and  judg- 
ments, had  their  prayer  granted,  theri  having  been  no  laches  on  their 
part,  and  their  title  being  perfected  before  the  judgments  were  re- 
overed.(c) 

The  hankers,  it  may  be  observed,  having  perfected  their  title  as  equi- 
table mortgagees,  must  have  been  preferred  to  the  judgment  creditors  in 
this  ease,  independently  of  the  statute. (c) 

indeed,  Buch  perfected  equitable  mortgage  will  prevail,  even  against 
an  extent  at  the  suit  of  the  crown. (<l)  except  where  the  mortgagor  is  an 
accountant  to  the  orown.(e) 

\  deed  of  conveyance  of  the  legal  estate  in  fee,  in  the  impropriate 
tithes  of  Balcolman,  mis  deposited  by  way  of  equitable  mortgage  with  a 

Edge  v.  Worthington,  1  Cox,  Oh.  Cae.  211. 
v.  Ei  parte  Tufiiell,  1  Dea.  A  Oh.  29. 

I  nith,  2  M.  D.  h  De  0.  587.  (a)  Ibid. 

Ei  parte  Nettleahip,  2  If.  D.  &  De  <;.  124  :  Ei  parte  Langston,  1  Rose,  26. 
i  ■•■  -  nol  hold  ofe  legal  mortgage.     Ei  parte  Sooper,  2  Rose,  328. 
(c)    Whitwortb   r.  Gaugain,    3    Hare,    416;    affirmed,    I    Phill.   It.    728,  and 
■•    v.  Porter,  3  B.  k  B.  7 1:: .-  lee  25  L.  .)  ,  Ch.  54  1. 
'       ■  rd  v.  An.  ecu.,  <;  Price,  -ill:  confirmed,  Watts  v.  Porter,  3  E.  &  B. 

10  Fector  v.  Phillpott,  L2  Price,  197. 
Broughton  v.  Daviea,  1  Price,  216. 


DEPOSITS    OP    SECURITIES.  105 

bank,  in  consideration  of  an  advance  of  money  by  a  person  who  was  heir- 
at-law  and  administrator,  with  the  will  annexed,  to  the  grantee  of  the 
conveyance,  who  was  deceased,  and  who,  by  his  will,  devised  all  bis 
right,  title,  and  interest,  in  the  tithes  of  Kilcolman,  (he  being,  at  the 
time  of  making  his  will,  only  equitable  mortgagee  of  the  same,)  to  A.  B. 
The  administrator  made  the  deposit  without  the  knowledge  of  A.  B., 
who,  from  the  time  of  the  death,  had  been  in  possession  of  the  said 
tithes,  and  had  frequently  applied  to  the  administrator  for  the  deed,  but 
could  not  obtain  it.  The  bank,  two  years  later,  filed  a  bill  against  the 
administrator  for  a  sale,  &c,  and  final  decree  for  sale  was  pronounced. 

*In  such  circumstances,  the  bankers  being  purchasers  for  r*ar\n-\ 
valuable  consideration,  without  notice  of  the  will  of  the  testator,  L  ~  WJ 
or  of  the  title  of  any  person  claiming  under  it,  will  be  protected  in 
equity ;  and  it  makes  no  difference,  that  the  person,  really  entitled  to  the 
tithes,  may  have  trover  for  the  deeds  in  a  court  of  law,  and  must  suc- 
ceed there.  Hence,  they  can  make  no  practical  use  of  the  deeds ;  and 
they  cannot  maintain  possession  of  them,  against  the  true  owner  of  the 
tithes,  who,  as  such,  is  entitled  to  the  deeds  ;  but,  in  equity,  they  have 
the  right  to  say,  that  they  ought  not  to  be  compelled  to  deliver  them  up, 
as  they  obtained  them  bona  fide,  and  without  notice. (/) 

Where  the  bankers  take  a  mortgage  as  security,  the  principal  point  to 
be  considered  is,  that  the  lands,  &c,  meant  to  be  charged,  shall  be  pre- 
cisely specified  or  designated.  It  is  true  that  the  intent  to  give  a  gene- 
ral charge  upon  all  the  property,  &c,  of  the  mortgagor,  may  be  explained 
aliunde,  but  the  shortest,  the  safest,  and  the  least  troublesome  and  ex- 
pensive, mode  of  effecting  an  arrangement  of  this  kind  is,  to  have  care 
taken,  that  the  mortgage  deed  is  made  as  complete  as  possible  within  it- 
self, so  as  to  require  no  subsequent  propping  up.  The  following  case 
seems  to  be  in  point  to  show  this. 

Articles  of  agreement,  under  seal,  were  entered  into  by  a  banker,  in 
the  country,  in  order  to  secure  a  bank  in  London,  the  correspondents  of 
the  former,  for  advances,  with  the  latter,  reciting  that  the  country  banker 
had  agreed  to  give  the  latter  a  mortgage  on  his  freehold  estates  at  Iver, 
subject  to  the  charge  affecting  the  same,  and  the  country  banker  agreed 
to  execute  a  mortgage  of  all  his  estate  and  interest  in  the  lands,  tene- 
ments, and  hereditaments,  at  or  near  Iver.  Part  of  the  property,  at 
Iver,  was  mortgaged  to  a  third  person,  and  a  part  also  was  copyhold.  It 
was  held,  that,  notwithstanding  the  recital,  the  security  extended  to  the 
property  at  Iver  which  was  not  subject  to  any  previous  *charge,  r^no-i 
and,  also,  to  the  copyholds ;  and,  also,  that  the  intention  to  give  L  J 
a  general  charge,  on  all  the  property,  might  be  explained  by  other  writ- 
ten memoranda  of  agreement ;  and  the  London  bankers  were  declared  to 
be  equitable  mortgagees  until  the  amount  due,  in  respect  of  their  secu- 
rity, should  be  realized. (g\ 

(/)  Joyce  v.  De  Moleyns,  2  Jo.  &  L.  374. 

\g)  Ex  parte  Glyn,  1  M.  D.  &  De  G.  29.  An  equitable  mortgage  may  be  made 
by  deposit  of  copy  of  court  roll.  Lewis  v.  John,  9  Sim.  366 ;  Whitbread  v.  Jordan, 
1  Y.  &  Coll.  Ex.  Eq.  303  ;  Tyler  v.  Webb,  6  Beav.  552  ;  see  Decree,  Price  v.  Carver, 
3  My.  &  C.  157,  163. 


[66         GRANT  ON  THE  LAW  OF  BAN  KIN'. 

Exchequer  Bills. — Where  A.  deposited  an  exchequer  bill  (with  the 
payee's  name  in  blank)  with  1!.,  in  order  that  he  might  Bel]  it,  but  B  . 
instead  of  doing  so,  places  it  in  the  hands  of  his  bankers,  who  advance 
him  money  to  the  amount  of  its  value 3  15.,  having  become  bankrupt,  it 
was  held,  by  the  majority  of  the  Court  of  King's  Bench,  that  A.  had  no 
right  of  action,  against  the  bankers,  to  recover  the  bill,  because  tin 
property  in  exchequer  bills  passes  by  delivery.(A)  It  will  be  observed, 
it  was  the  negligence  of  A.,  in  not  filling  up  the  blank  with  his  own 
name,  that  rendered  it  impossible,  for  the  bankers,  to  know  or  suspect 
that  1>.  was  not  dealing  properly  with  the  document;  if  A.  had  so 
marked  the  bill,  and  the  bankers  had  taken  it,  without  any  injury,  per- 
haps  the  n  -ult  might  have  been  different.  Mr.  Justice  Bayley,  however, 
differed  from  the  rest  of  the  court,  and  considered  that  exchequer  bills 
were  not  on  the  same  footing  as  bills  of  exchange,  and,  therefore,  not 
within  the  law  and  custom  of  merchants,  as  applicable  to  bills  of 
exchange,  but  that  they  were  to  be  taken  to  be  goods  and  chattels,  and 
subject,  therefore,  to  the  rule  that  the  pawnor  of  goods  cannot,  in  general, 

n/w-i  COnveya  better  title  than  he  ^possesses,  and  that  the  bankers 
L  ~  J  were  guilty  of  negligence  in  not  ascertaining  B.'s  right  to  dis- 
pose  of  the  instrument. 

Deeds,  relating  to  a  trust  estate,  were  deposited,  for  safe  custody,  at  a 
bankers',  in  a  tin  box,  marked  «  New's  Trust."  One  of  the  ostitis  qw 
trust,  „t  afterwards  opens  an  account  with  the  bank,  and,  on  its  appearing 
that  his  account  was  overdrawn,  makes  a  parol  agreement,  with  the 
bankers,  that  they  might  hold  the  deeds,  so  far  as  they  related  to  his 
inter*  -t  in  the  estate,  as  a  Becurity  lor  his  current  account.  Afterwards, 
;:  deed  of  partition  being  executed  between  the  customer  and  the  other 
persons  interested  with  him  in  the  estate,  he  signs  a  memorandum,  stat- 
ing that  he  has  deposited  the  (beds  therein  described,  u  as  a  collateral 
security  for  any  advances  you  may  make  on  my  behalf."  The  deeds 
described  in  the  memorandum  were  those  already  in  the  possession  of 
the  bank;  the  deed  of  partition  was  not  deposited;  but  the  whole  cir- 
cumstances showing,  that  the  intention  was  to  secure  the  bankers  against 
as  well  as  future  advances,  to  be  gathered  from  various  conversa- 
tions held  by  the  customer  with  one  of  the  partners,  and  with  one  of 
the  clerks  of  the   firm;    it  was   decided,  that  such  was  the   effect   of  the 

deposit,  and  that  the  bankers  were  equitable  1 tgagees  of  the  estates 

held  in  severalty  bj  the  customer,  and  that  the  security  extended  to 
advances  made  as  well  before  a-  after  the  date  of  the  memorandum. {%) 
Promissory  Notes. — For  persons  having  pecuniary  connections  with 
tie  Bast  [ndies,  the  following  decisions  may  be  serviceable,  as  showing 
the  relation-   between  them  and  banks  in  Calcutta,  \c.,  which  they  may 

constitute  their  agents,  in  oertain  01 

(/,)  Wookey  v.  Pole,   1  B.  &  A.  1  :  Form  of  Excheq.  Bill,  id.  •_'.     Vaw  Mils  do 
-  without  assignment.     Maclish  v.  Skins,  Saver.  1;.  7:1;  <t-c  .1  j;.' ,t  A    13 
80  in  case  of  bills  of  exchange,  indorsed  in  blank  ami  pledged,  the  real  owner  can- 
Collini  v.  .Martin.  1  ];.  ,v  I'.  648;  Treuttell  v.  Barandon.  1  J.  B. 

(0  Ex  parte  Farley,  1  If.  D.  k  De  G.  C83. 


DEPOSITS    OF    SECURITIES.  1G7 

The  payee  of  some  promissory  notes  of  the  East  India  Company,  by 
power  of  attorney,  authorized  his  agents  at  Calcutta,  a  firm  of  bankers, 
to  "sell,  indorse,  and  assign"  the  notes,  which  were  transferable  by 
indorsement,  and  payable  *to  bearer.  The  agents,  in  their  r*o(\&-\ 
character  of  bankers,  borrowed  money  of  the  Bank  of  Bengal,  L 
offering  as  a  security,  these  promissory  notes.  The  Bank  of  Bengal 
made  the  advance,  the  agents  indorsing  the  notes,  and  purporting  to 
make  the  indorsement,  as  attorney  for  their  principal ;  they  deposited 
the  notes  with  the  Bank  of  Bengal,  by  way  of  collateral  security  for 
their  personal  liability,  at  the  same  time  authorizing  the  Bank  of  Bengal, 
in  default  of  payment,  to  sell  the  notes,  in  reimbursement  of  their 
advance.  The  agents  afterwards  became  insolvent,  and  default  having 
been  made  in  payment,  the  Bank  of  Bengal  sold  the  notes  and  realized 
the  amount  of  their  loan.  The  indorsement  of  the  notes,  by  the  bank, 
was  considered,  by  the  judicial  committee  of  the  privy  council,  to  be 
within  the  scope  of  their  authority,  given  them  as  agents  of  the  payee, 
by  the  power  of  attorney ;  and,  consequently,  the  payee  could  not  recover 
in  detinue,  against  the  Bank  of  Bengal.  (7-) 

A  banker  having  made  advances  to  A.,  takes  his  promissory  note  for 
400/.,  payable  on  demand,  with  lawful  interest,  as  a  security  for  the 
advances.  The  banker  subsecpiently  indorses  the  note  to  B.,.as  a  security 
for  money  placed  in  his  hands  by  B.  Some  time  afterwards,  A.  and  the 
banker  settle  their  accounts,  and  A.  pays  the  balance,  but  neglects  to 
ask  for  the  note,  which  is  not  delivered  up  to  him.  Then  the  note 
passes  backwards  and  forwards  several  times,  between  the  banker  and 
B.,  during  all  which  time  the  former  was  indebted  to  the  latter  in  more 
than  400/.;  the  banker,  on  one  of  these  occasions,  telling  B.  that  it 
must  not  be  negotiated,  as  he  should  want  it  when  he  settled  accounts 
with  A.  When  this  communication  took  place  did  not  appear  exactly, 
but  it  was  before  the  last  time  the  note  was  deposited  with  B. ;  and  it 
was  held  to  be  decisive  to  show  that  *it  was  not  negotiated  to  r*2061 
B.,  but  only  deposited  with  him  as  a  pledge.  It  was  held,  L 
therefore,  that  B.  (or  his  assignees  on  his  bankruptcy)  could  not,  after 
the  settlement  of  accounts  between  A.  and  the  banker,  without  a  redeli- 
very of  the  note  to  A.,  recover  on  it  against  A. (7) 

Where  bankers  take  the  security  of  a  joint  and  several  promissory 
note,  signed  by  the  customer  and  another  person  as  surety,  for  a  floating 
balance,  in  their  account  with  the  customer,  due  to  them,  the  surety  is 
held  to  be  released,  by  the  bankers'  crediting  the  customer  with  the  full 
amount  of  the  note,  without  advancing  the  money  at  the  tinie.(m) 

Bonds,  Bills,  &c— Again,  where  a  trader  deposits,  with  his  bankers, 
a  bond  for  the  payment  of  a  sum  of  money,  with  interest,  given  by  X. 
to  Y. ;  certain  bills  of  exchange  drawn  by  Y.  and  accepted  by  X.  (as 
security,  for  the  payment  of  which,  the  bond  had  been  given;)  and  a 
mortgage  of  the  bond  and  bills  by  Y.  to  the  trader,  it  was  decided  that, 

(k)  Bank  of  Bengal  v.  Macleod,  5  Moo.  Indian  App.  0.  1 ;  7  Moo.  P.  C.  35 ;  S. 
P.,  Bank  of  Bengal  v.  Fagan,  5  Moo.  Indian  App.  C.  27 ;  7  Moo.  P.  C.  61.  See  in- 
fra, 207.  » 

(I)  Roberts  v.  Eden,  1  B.  &  P.  398.  (m)  Archer  v.  Hudson,  7  Beav.  551. 


GRANT  OX  THE  LAW  OF  BANKING. 

had  been  already  settled  by  former  decisions,  that  bills  of  exchange, 
when  deposited,  did  not  require  notice  to  be  given  to  the  debtor,  to  take 
tlinu  out  of  the  operation  <>t'  the  bankrupt  laws,  as  to  order  and  disposi- 
tion ;  so  a  bond  which  was  given  to  secure  the  payment  of  bills  of 
exchange,  for  the  benefit  of  the  holders,  did  nut,  under  these  circum- 
Btanoes,  require  notice  to  be  given  to  the  obligor. (71) 

In  a  former  case,  however,  notice  was  held  t"  be  necessary  to  give 
validity  to  a  deposit  of  a  warrant  of  attorney,  which  was  expressed  to  be 
execute]  to  secure  payment  of  bills  of  exchange,  one  of  which  was 
deposited  as  part  of  the  security.  But,  in  that  case,  the  deposited  bill 
had  not  been  indorsed,  and  there  was  only  an  equitable  right  in  the 
r*on-"i  ctepositee  *to  have  his  security  completed,  by  the  indorsement 
L       'J  of  the  bill.(o) 

A  deposit,  by  way  of  mortgage,  of  a  land  order  of  the  New  Zealand 
Land  Company,  is  good,  although  no  notice  be  given  to  the  company  of 
the  deposit. (p\ 

A  banker,  taking  security  from  a  customer,  by  a  bond  executed  by 
the  customer,  and  A.,  as  his  surety,  conditioned  for  the  payment  of 
all  sums  already  (at  the  delivery  of  the  bond)  advanced,  or  thereafter 
to  be  advanced,  by  the  banker  to  the  customer,  does  not  necessarily 
lose  his  right  of  suing  the  customer,  as  on  a  simple  contract,  for  the 
balance  of  the  customer's  account,  at  any  time  after  the  making  and 
accepting  of  the  bond.  In  other  words,  the  simple  contract  debt  is 
not  merged  in  the  specialty, (7)  at  least  when  the  balance  is  due  to  a 
banking  copartnership,  and  the  bond  is  given  to  two  persons,  manag- 
ing dire,  tors  of  the  company,  for  the  time  being,  especially  if  it  appear 
that  the  bond  was,  in  truth,  neither  given  nor  taken,  with  any  intention 
of  being  applied  to  cover  more  than  a  specific  sum,  whilst  the  balance 
might  become  larger  than  that  sum,  so  that  the  bond  was  clearly  intended 
•  ollateral  security  only. 

Where  a  person  gives  a  promissory  note  to  a  bank,  it  being  made  by 
him  in  their  favour,  with  the  intention  thereby  to  satisfy  a  liability  from 
which  he  was  discharged  at  law,  but  in  ignorance  of  the  facts  constitut- 
ing Buch  discharge,  there  the  bank  cannot  enforce  the  note,  although  the 
drawer  had  the  means  of  knowing  the  facts,  (r) 

A  trading  firm  in  Calcutta,  having  borrowed  a  Bum  of  money  from  the 
Hank  of  Bengal,  deposited  Bast  India  Company's  paper  with  the  bank, 
to  a  greater  amount,  as  collateral  security,  accompanied  with  a  written 
authorization,  to  the  bank,  in  case  of  default  of  repayment  of  the  loan, 
r*9fis  1  '•''  :i  -m'"  '';|.V-  '"  M'"  ''"'  East  [ndia  Company's  paper,  for  the 
L  J  reimbusement  of  the  Bald  bank,  rendering  to  the  firm  the  sur- 
plus. Before  default,  the  firm  are  declared  insolvi  nts,  under !)  Geo.  IV. 
c.  73,  the  Indian   Insolvent   Debtors  A.ct,  by  the  86th  section  of  which, 

(n)  K\  parte  Barnett,  !>.•  <;.  Bank.  R.  203  :  see  Ex  parte  M'Turck,  2  Deac.  58. 
■  )  Ej  parte  Price,  ::  If.  l».  k  De  G 

Ei  parte  Barnett,  De  <i.  Bank.  Rep.  203  ;  -<•■■  Ei  parte  M'Tnrck,  2  Dea< 

Bell,  ■':  If.  .v  Gra.  213;  and  aeeS.  C.,  3  Scott,  N.R.  419.    The  mer- 
ger, t<>  i><-  taken  advantage  <>f.  ought  to  oavi   1  een  specially  pleaded. 
Bell  v.  Gardiner,  4  M.  k  Gra.  u. 


DEPOSITS    OF    SECURITIES.  109 

(similar  to  6  Geo.  IV.  c.  16,  s.  56,)  when  mutual  credit  has  been  given 
by  the  insolvent,  and  any  other  person,  one  debt,  or  demand,  may  be  set 
off  against  the  other,  and  all  such  debts  as  might  be  proved,  under  a 
commission  of  bankruptcy,  in  England,  might  be  proved  in  the  same 
manner,  under  the  Indian  Insolvent  Act. 

At  the  time  of  the  adjudication  of  insolvency,  the  bank  were  also 
holders,  for  value,  of  two  promissory  notes  of  the  same  firm,  which  they 
had  discounted  for  them,  previously  to  the  transaction  of  the  loan,  and 
the  deposit,  &c.  When  the  time,  for  the  repayment  of  tbe  loan,  ex- 
pired, the  bank  sold  the  company's  paper,  the  proceeds  of  which,  after 
satisfying  the  principal  and  interest  due  upon  the  loan,  produced  a  con- 
siderable surplus.  In  an  action  by  the  assignees,  against  the  bank,  to 
recover  the  surplus,  it  was  held,  that  the  bank  could  not  set  off  the 
amount  of  the  promissory  notes,  which  were  then  due  and  unpaid,  and 
that  the  case  did  not  come  within  the  clause  of  mutual  credit,  in  the 
Bankrupt  Act. 

The  case  is  important,  because  the  court  held  it  to  be  manifest,  that  it 
was  to  be  dealt  with,  and  disposed  of,  exactly  as  if  it  had  arisen,  in  a 
proceeding  in  a  bankruptcy,  under  the  English  Act.(s)  It  is  to  be  ob- 
served, that  the  bank  gave  credit,  to  the  firm,  for  the  amount  of  the 
notes,  but  there  was  no  corresponding  credit  given,  by  the  firm,  to  them; 
it  was,  therefore,  uncertain  whether  there  would  be  any  money  coming 
to  the  firm  or  not;  and  if  the  assignees  had  redeemed  the  company's 
paper,  there  would  not  have  been  any :  the  credit  was  all  on  one  side. 

*If  a  trader  has  securities  bailed  to  him,  in  order,  that  by  de-  r*209I 
positing  them,  he  may  get  credit  with  the  bank  of  A.,  he  is  not  L  ^  J 
authorized,  after  having  redeemed  them,  from  the  bank  of  A.,  again  to 
deposit  them,  in  order  to  obtain  credit  with  the  bank  of  B.,  although  the 
securities  had  been  indorsed  to  him. 

When  a  trader  deposits  securities,  in  his  possession,  for  the  purpose  of 
obtaining  credit,  and  does  so  without  the  knowledge  of  the  owner  of  the 
securities,  he  is  not  to  be  considered,  if  he  redeems  them,  to  have  given 
fraudulent  preference  to  the  owner. (t) 

Marriage  Settlements. — In  a  case  where  a  person  had  assigned  his 
life  interest,  under  his  marriage  settlement,  in  stock,  standing  in  the 
names  of  the  three  trustees  of  the  settlement,  to  A.,  and  shortly  after- 
wards A.  had  communicated  the  fact  to  one  of  the  trustees,  who,  how- 
ever, was  not  the  acting  trustee,  and  the  communication  was  not  made 
with  any  intention  of  giving  validity  to  the  assignment,  and  A.  had 
several  subsequent  communications  with  him  on  the  subject,  it  was  held, 
that  the  object  with  which  the  communication  was  made  was  immaterial, 
and  that  notice  to  one  trustee  was  notice  to  all. (if )  If  the  trustee  has 
actual  knowledge,  at  the  time  the  transaction  takes  place,  the  principle 
of  law  may  be  taken  to  he,(y)  that  what  a  man  knows  for  one  purpose  he 

(s)  Young  v.  Bank  of  Bengal,  1  Moo.  P.  C.  150,  more  fully,  1  Deac.  622. 
(t)  Sinclair  v.  Wilson,  24  L.  J.,  Ch.  537. 

\u)  Smith  v.  Smith,  2  Cro.  &  M.  231 ;  Meux  v.  Bell,  1  Hare,  ,3  ;  see  per  Lord 
Langdale,  M.  R.,  2  Keen,  53.  . 

(i<)  See  1  Hare,  88.     Notice  to  the  solicitors  of  trustees  is  good  notice  to  tnem. 


170  QBANI    OH    THE    LAW    OP    BANKING. 

knows  for  all j  and  you  do  not  inquire  whether  he  learnt  it  in  one  oha- 
c  or  in  another,  (v) 

But,  in  the  ease  of  exeoutore,  notice  to  one  is  not,  in  all  cases,  notice 
t  i  all,  though  the  others,  in  poini  of  fact,  never  "'heard  of  any 
L  ~  J  dealings  ;it  all ;("')  at  least,  when  the  transaction  is  between  the 
acting  executor  and  his  Bon,  the  father  being  an  interested  party,  aud 
there  being  no  ground  to  presume  that  the  fact  was  communicated  to  the 
other-,  each  of  whom  had  separate  authority  to  receive  and  pay. (to) 

G  ■  Is. — A  pledge  of  jewels  is  made,  as  security  for  a  debt,  at  the 
time  of  the  pledge,  existing.  The  customer,  afterwards,  borrows  other 
sums  upon  a  general  account,  aud  then  insisted  upon  his  right  of  re- 
deeming  the  jewels,  on  payment  of  the  first  debt  only.  It  was  held  that 
he  must  pay  the  whole;  hut  it  was  admitted,  that  if  there  had  been  hond 
creditor-,  or  in  case  of  a  bankruptcy,  the  pledge  could  have  been  retained 
only  for  the  first  sum,  aud  the  hankers,  in  such  case,  must  have  come  in, 
under  the  jiat,  for  the  remainder. (x) 

] Jankers  advance  a  sum  of  money  to  the  wife  of  a  person  absent  in 
India,  on  the  security  of  a  chest  of  plate,  deposited  with  them,  and  on 
the  guarantee  of  a  customer.  This  sum  was  repaid  to  the  hank.  After- 
wards they  advance  another  sum,  with  the  consent  of  the  guarantor,  the 
plate  -till  remaining  in  the  keeping  of  the  hankers;  the  wife  had  autho- 
rity to  pledge  the  plate,  in  case  of  emergency,  and  the  customer  himself 
id  the  second  loan.  Then  the  husband  dies  intestate,  and  his  admin- 
istrators sue  the  hankers  for  the  recovery  of  the  chest  of  plate;  but  the 
plea  of  the  hankers,  that  they  held  it  in  virtue  of  the  customer's  lien  on  it, 
and  by  his  re.in.--t,  was  a  good  answer;  for  that,  under  the  above  cir- 
cumstances, the  bank  might  be  taken  to  have  made  the  second  advance 
on  the  credit  of  the  customer,  who,  consequently,  had  a  lien  on  the  chest 
r*°111  °^  l''aU'-  ^though  "there  was  no  previous  arrangement  or  oon- 
L  -I  tract  with  him.(//j 

If  the  security  offered  be  g Is,  the  banker  ought  to  bear  in  mind  the 

imprudence  of  entering  into  such  transaction  by  way  of  half  measures; 
the  transaction  ought  to  he  made  complete,  or  not  entertained  at  all;  it 
ought,  for  the'  bankers'  safety,  to  he  left  on  such  a  footing,  as  will  hear 
legal  scrutiny,  or  it  ought  never  to  he  taken  in  hand.  To  make  such 
transactions  valid,  there  ought  to  be  a  hill  of  -ale,  executed  by  the  debtor, 

under  which  actual  possession  of  the  goods  ought  to  he  taken  and  re- 
tained.    The  following  case  illustrates  this. 

A  trader,  being  in  advance  with  his  bankers,  gave  them  a  receipt  for 

10,000/.,  purporting  to  he  the  purohase-m tyofthe  furniture,  fixtures, 

plate,  effects,  &c.,  in  his  dwelling-house,  but  no  possession  of  the 

was  given,  at  that  time,  and  no  hill  of  salt  iited.     More  than  a 

FoBter  v.  Blackstone,  1  My.  <v  K.  297 ;  S.  ('.,  nom.  diver-,..  9  l;li.  (N.  S.)  375,  370; 
Bee  also  Gale  v.  Lewis,  '■<  Q.  B.  7 1_. 
preceding  note. 
Tun-, .n  \.  Ramabottom,  2  Bta  e  l  Bare,  96,  97;  per  Sir  B.  Sug- 

1  .   [re.,  Ei  parte  Benessy,  ]  Connor  fc  L.  R.  662;  8.  0 ..  2  Dru.  k  Wax.  555. 
Demainbray  v.  Metcalfe,  Prec.  Oh.  419;  8.  <'..  2  Vera.  691,  as  explained  in 
A,i;iin,  v.  Olaxton,  8  Vc-.  229,  per  Mr  W.  Grant,  M.  ];. 
0  l    anoi  r.  Majoribanks,  7  Jur.  B34,  «'.  i; 


DEPOSITS    OF    SECURITIES.  171 

year  afterwards,  the  bankers  sent  a  person,  to  whom  possession  was  given, 
by  the  trader's  delivering  him  a  chair,  on  behalf  of  the  bankers'  posses- 
sion, of  all  his  furniture  and  effects,  in  and  about  the  premises,  and  on 
the  same  day,  the  trader  filed  a  declaration  of  insolvency,  and  sued  out  a 
fiat  in  bankruptcy  against  himself.  It  was  contended,  that  this  delivery 
of  possession  was  an  act  of  fraudulent  preference.  The  court  considered 
otherwise,  but  left,  undecided,  the  question  as  to  the  effect  of  the  joint 
possession  of  the  trader's  servants,  and  the  person  sent  by  the  bankers, 
of  the  goods,  &c,  in  the  trader's  house,  seeming  to  think  the  trader 
oufht  to  have  left  the  house,  and  relinquished  the  physical  dominion  of 
the  whole  to  that  person, (2)  otherwise  no  one  could  know  that  *the  r-^o-i  9-1 
latter  was  in  possession,  or  that  the  goods  were  not  in  the  order  L  ""  ""J 
and  disposition,  &c,  of  the  bankrupt,  at  the  time,  &c. 

The  result  of  this  is,  therefore,  that  the  safe  mode  for  a  banker  to  adopt, 
who  wishes  to  secure  himself,  in  respect  of  advances  to  a  customer,  in  a 
similar  manner,  is  to  take  a  bill  of  sale  of  the  goods,  &c,  and  insist  upon 
having  full  possession  given  up  to  him. 

Goods,  &c,  at  Sea. — A  banker  may  also  safely  take  an  assignment, 
by  way  of  mortgage,  of  a  ship  and  cargo,  while  the  ship  is  on  her  voyage, 
which  will  operate,  in  equity,  to  assign  as  well  the  future  cargo,  as  that, 
if  any,  which  existed  at  the  time  of  the  assignment,  and  if  notice  be  sent 
to  the  master  of  the  vessel,  and  the  master  deliver  up  possession  of  the 
ship  and  cargo,  shortly  after  her  return  from  the  voyage,  the  equitable 
title  of  the  banker  will  be  considered  to  be  complete,  and  not  to  be  de- 
feated by  a  judgment  creditor  of  the  assignor,  who  afterwards  sued  out 
a  writ  of  execution,  and  proceeded  to  take  the  ship  and  cargo  in  execu- 
tion, (a)  If  an  equitable  mortgage,  not  registered,  is  taken,  it  must  be 
remembered  that  it  will  be  postponed  to  a  subsequent  registered  mort- 
gage, though  the  subsequent  mortgagee  had  notice  of  the  prior  equitable 
mortgage,  (i) 

If  bankers  take,  from  a  consignee  of  goods,  in  consideration  of  ad- 
vances, the  security  of  a  bill  of  lading,  (indorsed  generally  to  bearer,) 
and  of  a  policy  of  insurance  on  ship  and  goods,  effected  by  the  consignee, 
in  pursuance  of  an  agreement  with  the  bankers,  both  deposited  with 
them,  and  they  pay  the  premium  to  the  insurance  company,  the  insur- 
ance *being,  in  fact,  effected  to  secure  them,  they  may  sue  in  r*213"l 
their  own  names,  upon  the  policy  for  the  loss  or  damage  incurred ;  L  J 
if,  on  the  other  hand,  the  consignee  had,  in  the  first  instance,  insured 

(2)  Ex  parte  Majoribanks,  De  G.  Bank.  R.  477,  referring  to  Mace  v.  Cadell, 
Cowp.  232  ;  Latimer  v.  Batson,  4  B.  &  C.  652  ;  Woodall  v.  Smith,  1  Campb.  333  ; 
see  also  Ex  parte  Castle,  3  M.  D.  &  De  G.  117  ;  Fawcett  v.  Fearne,  6  Q.  B.  20 ;  Ex 
parte  Sharp,  3  M.  D.  &  De  G.  490,  494.  Where  the  original  owner,  in  pursuance 
of  an  agreement  which  was  (it  is  stated)  notorious  in  the  neighbourhood,  remained 
in  possession  of  the  furniture,  &c,  in  the  house,  and  became  bankrupt  whilst  so 
remaining,  it  was  held  not  to  be  a  possession  by  the  bankrupt  within  the  statute 
21  Jac.  1,  c.  19,  s.  11  ;  Muller  v.  Moss,  1  Mau.  &  S.  335 ;  S.  C,  2  Rose,  99 ;  see  also 
Price  v.  Groom.  2  Exch.  542.  A  mortgage  of  chattels  may  be  without  deed,  Flory 
v.  Denny,  21  L.  J.  (N.  S.)  Exch.  224. 

(a)  Langton  v.  Horton,  1  Hare,  549. 

(b)  Coombes  v.  Mansfield,  3  Drewry,  193. 


172  GRANT    OK    THE    LAW    OF    BANKING. 

the  Bhip  and  goods,  not  in  the  capacity  of  agent  for  the  bankers,  but  in 
the  ordinary  waj  of  business,  and  then  had  agreed  for  the  deposit  of  the 
bill  of  lading,  and  the  policy,  with  them,  the  action  could  only  have  been 
brought  in  the  name  of  the  consignee.(c) 

The  next  case  we  shall  cite  is  a  case  of  a  mortgage,  by  deed,  of  ship 
and  freight,  &o. 

<  >in-  of  two  partners,  whose  firm  had  an  account  with  a  bank,  obtained 
discount  of  a  promissory  note,  made  by  the  firm,  from  the  bank,  on  an 
agreement  for  a  mortgage  of  shares,  belonging  to  the  firm,  in  certain 
ships,  and  their  freight,  and  of  the  policies  of  insurance  effected  by  the 
firm  on  the  shares.  A  mortgage  deed  was  prepared  accordingly,  pur- 
porting to  be  made  by  both  partners,  but  it  was,  iu  fact,  executed  by  the 
one  only,  the  other  refusing.  At  the  time  of  the  execution  of  it,  one  of 
the  ships  was  lust,  but  the  fact  was  unknown  to  the  parties.  The  secu- 
rity was  held  to  be  binding  on  the  firm,  notwithstanding  the  execution 
by  one  partner  only,  and  to  pa--  the  insurance  money,  although  the  deed 
was  cot  registered  according  to  the  shipping  acts.  The  deed  purported 
to  be  for  securing  the  balance  of  the  account  current.  Notice  was  given, 
by  the  bank,  to  the  underwriters,  previously  to  any  act  of  bankruptcy. 
The  case  was  considered  to  be  distinguished  from  those,  in  which  the 
courts  have  laid  down  or  acted  on  the  rule,  that  one  partner  cannot  bind 
copartners  by  deed,  by  the  circumstance  that  there  was,  in  this  case,  a 
previous  contract,  by  or  on  behalf  of  the  firm,  to  execute  the  mortgage, 
r*-?in  which  was  a  "transaction,  within  the  authority  of  the  partner,  to 
L         -I  bind  the  firm,  by  means  of.(d\ 

1  Jut  it  is  unquestionable,  that  many  difficulties  and  niceties  involve 
this  Bubject ;  and  moreover,  probably  in  no  case,  where  it  can  possibly 
be  avoided,  ought  a  banker  to  attach  any  great  value  to  the  assignment, 
as  a  security,  of  a  marine  insurant 

The  following  case  is  somewhat  peculiar,  but  may  properly  be  Stated 
here,  with  a  view  to  further  illustrating  the  position  of  bankers,  as  re- 
gards questions  relating  to  security  on  goods  on  board  ship. 

Brown,  a  merchant,  at  Liverpool,  had  a  banking  account  with  Smiths, 
Sons  &  Co.,  bankers  iu  London,  who  also  carried  on  the  business  of  mer- 
chants, under  the  firm  of  Smiths  and  Atkinson,  in  London,  and  it  was 
agreed  that,  for  the   purpose  of  securing  advances,  which  Smiths,  Sons 

&  Co.  might  make  to  Brown  iii  answering  his  drafts,  &c.,  Brown  should 
remit  them  good  bills  of  exchange,  should  lodge  a  credit  with  two  houses 
at  Hamburgh,  against  goods  consigned  to  those  houses,  to  a  certain 
amount,  of  which  Smiths,  Sons  a.  Co.  Bhould  avail  themselves,  &c.,  and 

also  as  a  collateral  security,  that    BroWD    Bhould    Consign,  to  the  house  of 

Smiths  and  Atkinson,  certain  goods  on  sale  for  their  account;  and  ac- 

(r)  Sutherland  v.  Pratt.  \2  M.  .1-  \V.  16.     E  tamp,  Harris  v.  Birch,  9  M 

.•c  \v.  591.     When  tin'  liill-  of  lading  had  been  banded  over  before,  but  not  in- 
r,  the  bankruptcy,  planation  of  the  decisions  given,  Bel- 

cher v.  Capper,  i  II.  a  I 
t<i)  Ex  parte  Bosanquet,  De  G.  Bank. B.  432.    Bee  ae  to  assignment  of  shaces 

ihip,  Douglas  v.  Russell,  4  Sim.  5 
(t)  .See  Boddington  v.  Oastelli,  23  L.  J.  (N.  8.)  Q.  B.  32. 


DEPOSITS    OP    SECURITIES.  173 

cordingly  Brown  remitted  to  Smiths  and  Atkinson  the  invoice  of  a  cargo 
and  bill  of  lading,  indorsed  in  blank.  But  the  ship,  in  which  the  cargo 
was  loaded,  was  prevented  leaving  Liverpool,  by  an  embargo.  Some- 
time afterwards,  Brown  became  bankrupt,  the  balance  of  accounts  being 
in  favour  of  Smiths,  Sons  &  Co.,  and  the  cargo  was  delivered,  by  the 
captain  of  the  ship,  to  the  assignees.  It  was  held,  that  the  indorsement 
and  remittance  of  the  bill  of  lading,  to  Smiths  and  Atkinson,  in  accord- 
ance with  the  *previous  agreement  of  the  parties,  changed  the  r*9i  5-1 
property  in  the  goods,  which  were  to  remain  in  their  hands,  L 
clothed  with  the  trust  expressed  in  the  agreement,  and  that  Smiths  and 
Atkinson  might,  therefore,  maintain  trover  against  the  captain,  to  re- 
cover the  value  of  the  cargo.  (/) 

As  there  is  no  doubt  that  a  person  may  give  an  effectual  security  upon 
property  of  his  at  sea,  before  it  has  come  to  hand,  so  he  may  also  pledge 
a  policy  of  marine  insurance  with  another  person,  or  with  bankers,  and 
they,  if  due  notice  have  been  given  to  the  underwriters  or  insurance 
company,  will  be  entitled  to  receive  the  principal  sum  insured,  upon 
the  event  insured  against  happening.  The  cases  cited  below  show  this. 
The  following  facts  are  detailed,  for  the  purpose  of  showing  an  instance 
of  a  defective  deposit  of  this  class. 

A.  opens  an  account  with  a  bank,  the  arrangement  being,  that  he 
should  be  allowed  to  overdraw  to  a  certain  amount,  but  that,  if  he  over- 
drew beyond  that  amount,  he  should  find  security ;  eventually  he  over- 
drew beyond  the  specified  amount,  without  finding  security ;  the  bank 
pressed  for  payment  of  the  whole,  or  at  least  a  portion,  of  the  balance. 
A.,  in  reply  by  letter,  stated  that  the  arrival  of  the  ship  Tagus,  which 
was  daily  expected,  would  enable  him  to  adjust  the  account,  and  inclosed 
a  policy  of  insurance  on  the  cargo  of  the  Tagus,  indorsed  payable  to 
the  manager  of  the  bank,  the  indorsement  being  signed  by  A.  The  bill 
of  lading  was  not  deposited,  and  when  the  bankers  applied  for  it,  A. 
stated  his  inability  to  part  with  it,  acknowledging  that  he  was  in  insolvent 
circumstances,  and  could  not,  in  duty  to  other  creditors,  part  with  the 
possession  of  any  of  their  assets.  On  these  facts,  it  was  held  that  the 
letter  and  indorsement  of  policy  did  not  create  such  a  specific  charge  or 
lien  on  the  cargo,  as  would  entitle  the  bank  to  priority  over  general 
creditors.  (#) 

*This  case  turned  entirely  on  the  expressions  used  in  the  r*216~| 
letter. 

Change  of  Firm. — The  question  may  frequently  arise,  in  practical 
banking,  as  to  the  effect,  of  a  change  of  firm,  upon  a  security,  deposited 
with  the  bank,  before  the  alteration.  The  following  case  will  tend  to 
explain,  the  position  of  the  bank,  in  such  circumstances. 

A.  deposits  with  a  bank,  by  way  of  security,  for  advances,  a  joint  and 

( f)  Haille  v.  Smith,  1  B.  &  P.  563. 

(ff)  Jones  v.  Starkey,  16  Jur.  Ch.  510 ;  see  also  Castelli  v.  Boddmgton,  22  L.  J. 
(N.  S.)  Q.  B.  5  ;  S.  C,  in  error,  23  id.  Q.  B.  31.  A  person  may  give  a  valid  secu- 
rity on  merchandise  at  sea  belonging  to  him,  although  at  the  time  he  is  in  igno- 
rance of  the  particulars  of  which  it  consists,  Ex  parte  Kelsall,  De  G.  Bank.  R. 
352. 


174  Q  R  A NT  ° N  T n E  L  A  w  ( ' F  B  A N  K l -x  (;- 

1  promissory  note,  made  payable  to  order  mi  demand,  with  interest, 
whereby  A.  &  I>.  promised  to  pay,  on  demand,  Pease  and  others,  and 
l;.  II.  or  order,  300?.,  with  interest.  A.  paya  interest  regularly.  At 
one  time  ho  had  a  balance,  in  the  bankers'  hands,  exceeding  the  amount 
of  the  note.  After  the  note  is  deposited  the  linn  changes.  Held  by 
the  court — 

1.  The  imt.'  being  a  continuing  Beourity,  inasmuch  as  it  is  made 
payable  to  order,  might  he  indorsed,  notwithstanding  the  change  in  the 
banking  firm. 

2.  The  note  not  having  been  indorsed,  the  original  payees,  being 
a  partnership,  or  the  survivors  of  them,  were  the  proper  parties  to  sue 
upon  it. 

:;.  The  note  was  not  discharged,  by  the  fact  <>t*  A.'.s  having  at  one 
time,  since  the  deposit  of  it,  in  the  bankers'  hands,  a  balance  exceeding 
its  amount. 

4.  Payment  within  six  years,  of  interest,  by  A.,  took  the  note  out  of 
the  operation  of  the  Statute  of  Limitations  as  to  B.(Ji\ 

Whenever,  therefore,  bankers  take  a  security  of  this  kind,  it  is  indis- 
pensable  for  their  security,  either  that  they  indorse  *the  note 
L  ~  J  within  the  six  years  from  its  date,  or  that  they  put  it  in  Buit 
within  that  time,  or  that  they  take  care  that  the  interest  is  regularly 
paid  upon  it,  in  order  to  make  it  effectual  as  a  security,  and  guard  theni- 
seh  es  against  loss. 

"Where  a  customer  deposited  title  deeds  of  copyhold  estate  with  his 
bankers,  the  deposit  being  agreed  to  b>  urity,  not  only  for  a  sum 

already  advanced  by  the  bankers  to  him,  but  also  for  any  other  sum-  of 
money  which  might  be  afterwards  advanced  by  the  linn.  Afterwards, 
one  of  the  linn  dies,  and  another  person  is  afterwards  added  to  the  linn, 
.   thing  else   remaining  the   same    as    before,  in  the   relations  of  the 

customer  to  the  firm.  About  six  years  elapse,  when  a  fiat  in  bankruptcy 
inst  the  depositor,  and  it  becomes  a  question  whether  the 
deposit  enures  to  the  benefit  of  the  newT  firm  :  but  it  was  held  that  it 
did;  for  that  the  circumstances  amounted  to  a  tacit  acknowledgment, 
that  tin'  deeds  were  deposited,  with  the  new  firm,  on  the  same  terms,  as 
they  had  been  with  the  old  one.(t)  It  may,  probably,  now  be  laid  down 
with  confidence,  that  the  continuance  of  the  suue  modes  of  dealing 
with  the  new  firm,  as  with  the  "Id,  and  the  continuance  of  the  deposit 
in  the  hand-  of  the  new  linn,  will  be  construed  into  a  tacit  recognition 
by  the  depositor,  that  the  new  hold  the  deeds  for  the  like  object  and 
purpose  a-  the  old  one  did,  and  Maud  in  the  smio  relation  to  him. 
Nevertheless,  in  practice,  it  is  desirable  for  bankers,  in  order  to  avoidall 

tionB,  as    to   whether  a    sufficient    period    has    elapsed,  to  enable    the 
court    to  gay  thai  the  intention  of  the  depositor  was  clearly  manifested, 

(h)   I  5  Han.  &  i:y.  B8;  S.  •'..  L0  B.  &  •'.  122.     It  seems  probable 

•■.  bad  called  it i >< iii  the  linker-;  to  apply  A.'.-  balance,  when  it  was 
to  tie-  discharge  of  tin-  note,  they  wonld  have  been  bound  to  do  so,  see 
per  Bayley,  .1..  5  Man.  &  R.  92. 

i:.\  parte  Kensington,  .'  \'<  -.  &  B.  79,  83;  E\  parte  Oakes,  '_'  M.  D.  &  De  G. 
parte  Smith.  2  M.  D.  a:  De  G.  314;  see  L9  k  20  Vict.  c.  07,  s.  4. 


DEPOSITS    OF    SECURITIES.  1;;, 

and  to  make  it  quite  certain  that  he  was  aware  of  the  change,  &c,  to 
have  a  fresh  memorandum  of  deposit  made,  purporting  to  secure  the 
new  firm. 

To  close  this  subject,  we  may  mention  some  considerations,  arising 
out  of  the  proportion,  which  the  value  of  the  security  taken,  bears  to  the 
debt  which  it  is  taken  to  secure. 

*At  law,  the  general  principle  has  been  laid  down,  with  respect  p,,9-.  „.. 
to  insolvency,  that  if  the  debt  to  be  secured  was  less  than  the  debt  L  J 
assigned,  and  there  was  nothing  more  than  a  simple  assignment  of  the 
debt,  as  a  security,  in  such  case,  the  assignees  of  the  insolvent  would 
have  an  immediate  interest  in  the  sum  to  be  recovered,  from  which, 
benefit  to  the  creditors  might  result,  and  they  would  not  have  been  bound 
to  refund,  to  the  equitable  assignee  of  the  debt,  all  they  had  recovered ; 
and  this  being  the  test,  at  law,  of  the  right  of  the  assignees  to  sue,  or 
not,  for  the  debt,  the  right  of  action,  in  such  circumstances,  would  vest 
in  them. (A') 

Again,  if  the  debt  assigned  be  equal  to  the  debt,  to  secure  which  it  is 
assigned,  i.  e.,  equal  at  the  time  of  assignment,  this  does  not  necessarily 
make  any  difference ;  for  if  the  debt  secured  be  subsequently,  and  before 
the  debt  assigned  has  been  recovered,  reduced  by  payment  or  by  the 
realization  of  other  securities,  there  would  be  a  surplus,  applicable  to 
the  payment  of  the  insolvent's  general  creditors,  and  the  possibility  of 
that  surplus  would  vest  the  title  to  recover  the  debt  in  the  insolvent's 
assignees.  Uc\ 

And  the  same  seems  to  be  the  rule,  at  law,  if  the  debt  assigned,  by 
way  of  security,  were  greater  than  the  debt  to  be  secured;  i.  e.,  greater 
at  the  time  of  assignment.  In  this  case,  also,  as  in  the  others,  the  right 
of  action,  for  the  debt,  vests  in  the  assignees.^) 

In  equity,  there  appears  to  be  no  difference  whatever  with  regard  to 
the  above  points,  whether  the  assignment  is  of  a  policy,  the  sum  insured, 
whereby,  is  equal  to,  or  less  than  the  sum  for  which  it  is  taken  as  a 
security,  or  partial  security,  by  the  bankers,  or  whether  it  is  of  a  policy 
for  a  sum  exceeding  that  due  by  the  assignor  to  the  bankers,  so  that  it 
is,  in  fact,  an  assignment  by  way  of  mortgage;  in  either  case  their 
receipts  will  be  discharges  to  the  insurance  office;  in  ^neither  p^oian 
case  can  there  be  any  interpleader.  If,  however,  the  mortgagor,  L  "  l  J 
after  the  date  of  the  assignment  of  the  policy,  by  way  of  mortgage,  as 
security,  satisfied  the  bankers,  and  gave  notice  to  the  insurance  company 
that  he  had  done  so,  so  that  the  mortgage  was  no  longer  in  force ;  in 
such  a  case,  the  company,  other  things  remaining  the  same,  might  have 
a  right  to  have  the  relative  rights  and  claims  of  all  parties  adjusted,  by 
the  court,  on  interpleader.  (l\ 

Perhaps,  also,  if  notice  be  served  by  a  provisional  assignee  of  an  insol- 
vent, upon  the  insurance  company,  not  to  pay  to  the  bank,  and  he  pro- 

(Jc)  D'Arnay  v.  Chesneau,  13  M.  &  W.  809,  810  ;  compare  Dessborough  v.  Harris, 
3  Eq.  R.  1058 ;  and  see  also  per  Pollock,  C.  B.,  Boddington  v.  Castelli,  23  L.  J. 
(N.  H.)  Q.  B.  33,  as  to  possibility  of  surplus  vesting  right  of  action. 

(I)  Dessborough  v.  Harris,  3  Eq.  R.  1058  ;  1  Jur.  (N.  S.)  98G,  overruling  Fenn  v. 
Edmonds,  5  Hare,  314. 

February,  1857. — 13 


176  GRANT    <>N    THE    LAW    OF    BANKING. 

ceeds  to  take  active  steps  to  enforce  his  claim  to  the  proceeds  of  the 
policy,  it  might  be  held,  thai  the  company  were  entitled  to  the  same  ad- 
justment, effected  in  the  same  way. 


[*220]  "CHAPTER    VII. 

GUARANTEES,   BONDS,    ETC.    GIVEN    TO   BANKERS. 

As  to  guarantees,  or  bonds,  &c.,  given  by  third  parties  to  bankers,  to 
secure  their  advances  to  customers,  &C.,  it  may  be  useful  to  examine 
various  decisions,  in  order  to  perceive  and  note  the  grounds  of  the  law 
on  which  they  have  rested,  and  the  duties  and  rights  of  bankers  arising 
out  of  the  principles  they  lay  down. 

A.,  a  customer  of  a  bank,  having  overdrawn  his  account,  upwards  of 
10,000/.,  13.  and  others  execute  a  bond  to  the  bankers  to  secure,  gua- 
rantee, and  indemnify  the  latter  for  any  sums,  which,  for  ten  years,  they 
might  advance  to  A.  on  bills  drawn  by  him,  or  made  payable  at  their 
house,  and  on  all  cheques,  notes,  orders,  and  other  engagements  of  A., 
not  exceeding  the  sum  of  5,0U0/.  in  the  whole,  together  with  interest  on 
the  said  sums,  kc.  This  bond  was  not  to  affect  a  prior  security  given 
by  A.  to  the  bankers;  but  the  bankers  gave  no  notice  to  B.  or  to  the 
other  obligors,  that  A.  was  indebted  to  them,  in  the  above  sum,  at  the 
time  of  executing  the  bond.  The  bankers  continued  to  make  advances 
in  A.,  who  afterwards  became  bankrupt,  and  in  the  final  close  of  accounts, 
he  was  indebted  to  them  upwards  of  10,000/.  After  the  ezecntii 
the  bond,  he  had  paid  in  sums  considerably  exceeding  5,000/. ;  he  saw 
the  accounts  every  fortnight,  and  received  vouchers  halt-yearly,  and  knew 
how  the  different  payments  were  applied,  but  never  made  any  objection, 
or  gave  any  directions,  as  to  their  application. 

J>.  was  held  to  be  liable  to  the  extent  of  5,000/.,  but  one  of  the  learned 
judges  gave  his  assent,  with  great  reluctance,  thinking  it  far  from  clear 
that  the  sureties,  on  executing  the  bond,  did  doI  intend  that  any  fresh 
n  payments,  made  by  A.,  "should  go  to  the  new  account,  leaving 
L  ~"  J  the  bankers  to  their  remedy,  on  the  former  bond,  for  the  reduction 
of  the  old  account. (") 

Chang\  of  Firm. — A  guarantee,  given  by  a  person  to  secure  a  bank- 
ing copartnership,  consisting  of  several  members,  all  and  every  sums  or 
sum  of  money  which  might  become  due  to  tlu  ///,  from  a  certain  customer, 
for  money  advaniid  to  him,  &C.,  upon   any  bill-,  &C.,  made  payable  at 

Williams  v.  Rawlinson,  ?>  Bing.  71  :  and  Bee  S.  <"..  as  to  Btamp,     "Wlicn  the 
mer  and  another  person  join  in  a  bond  conditioned  tor  the  payment  of  all 
sums  advanced  or  to  be  advanced  to  the  customer,  the  bankers  may  nevertheless 
c  tor  the  balance,  as  on  a  debt  by  Bimple  contract,  there  being  no 
merger,  the  parties  to  the  bond  not  being  those  between  whom  the  original  lia- 
bility arose.    Holmes  v.  Bell,  ::  M.  &  Gra.  220. 


GUARANTEES,  BONDS,  ETC.,  GIVEN  TO  BANKERS.  177 

the  banking  house  of  the  copartnership,  does  not  bind  the  obligor, 
after  the  death  of  one  of  the  partners,  nor  cover  future  advances  made, 
after  such  death,  and  the  taking  in  of  another  partner;  and  the  customer 
who,  at  the  time  of  the  death,  was  indebted  to  the  house,  having  after- 
wards paid  off  the  balance  incurred  previously  to  the  death,  the  obligor 
was  wholly  discharged.  (&) 

There  is  no  doubt,  however,  that  a  guarantee  may  be  drawn,  in  such 
terms,  as  will  serve  as  a  continuing  indemnity  to  the  house,  whatever  be 
the  change  of  partners ;  but  then  that  must  plainly  appear  from  the  lan- 
guage used  ;(c)  the  courts,  both  of  equity (c?)  and  common  law(e)  appear  to 
lean  against  increasing  the  liability  of  a  guarantor  to  a  banking  firm  in 
this  respect.  This  principle  of  construction,  *narrowing  the  lia-  r*ooo-\ 
bility  of  a  surety,  applies  quite  as  strongly,  from  the  nature  of  L  J 
it,  when  the  advances  to  be  secured  are  to  be  made  to  a  firm  ;  for  it  is 
obviously  an  assumption  to  conclude,  that  a  party  guarantees  advances  to 
A.,  B.  and  C. 

And  since  the  decisions,  which  established  this  principle,  the  legisla- 
ture appears  to  have  ratified  and  confirmed  it,  by  enacting,  as  fol- 
lows : — (/) 

"  No  promise  to  answer  for  the  debt,  default,  or  miscarriage  of  another, 
made  to  a  firm,  consisting  of  two  or  more  persons,  or  to  a  single  person, 
trading  under  the  name  of  a  firm,  and  no  promise  to  answer  for  the  debt, 
default,  or  miscarriage  of  a  firm,  consisting  of  two  or  more  persons,  or  of 
a  single  person,  trading  under  the  name  of  a  firm,  shall  be  binding  on 
the  person  making  such  promise,  in  respect  of  any  thing  done  or  omitted 
to  be  done,  after  a  change  shall  have  taken  place  in  any  one  or  more  of 
the  persons  constituting  the  firm,  or  in  the  person  trading  under  the 
name  of  a  firm,  unless  the  intention  of  the  parties,  that  such  promise 
shall  contiue  to  be  binding,  notwithstanding  such  change,  shall  appear, 
either  by  express  stipulation,  or  by  necessary  implication,  from  the 
nature  of  the  firm,  or  otherwise." 

Since  this  statute,  therefore,  guarantees  of  this  sort  may  either  ex- 
pressly stipulate  for  the  continuance  of  the  undertaking,  (when  the  in- 
tention is  that  it  should  continue,)  notwithstanding  changes  in  the  firm  ; 
or  if  the  parties  choose  to  take,  upon  themselves,  the  risk  of  determining 
that  the  firm  is  of  such  a  nature,  as  necessarily  to  imply  the  continuance 
of  the  guarantee,  notwithstanding  the  change,  &c,  they  may  do  so,  and 
need  not  insert  an  express  provision  to  that  effect ;  and  so  they  need  not 
insert  an  express  provision,  if  they  choose  to  incur  the  risk  of  proving 

(b)  Strange  v.  Lee,  3  East,  484 ;  and  see  ace.  Weston  v.  Barton,  4  Taunt.  67  - 
where  larger  words  were  used,  see  Bodenkam  v.  Purchas,  2  B.  &  A.  39  ;  Dry  v.  Da- 
vey,  10  A.  &  E.  30. 

(c)  See  form  in  Earle  v.  Oliver,  2  Excb.  71,  72,  and  stat.  19  &  20  Vict.  c.  97,  s. 
4,  infra,  p.  222. 

(d)  Pemberton  v.  Oakes,  4  Russ.  154;  see  3  Q.  B.  721,  722. 

(e)  Cbapman  v.  Beckinton,  3  Q.  B.  703 ;  see  6  id.  526.  A  counter  promise  by 
the  customer,  even  when  made  after  fiat  and  before  certificate  in  bankruptcy,  that 
if  the  surety  be  called  upon  to  pay  the  sum  guaranteed,  the  customer,  when  able, 
will  repay  it,  may  be  supported.     See  Earle  v.  Oliver,  2  Exch.  71. 

(/)  19  &  20  Vict.  c.  97,  s.  4. 


17-        GBANT  ON  THE  LAW  OF  BANKING. 

aliunde,  this  to  have  been  the  intention;  but  it  is  manifestly  the  safe 
r*99Q~i  aUL^  most  *convenient  oourse,  in  all  cases,  to  insert  an  express 
-I  stipulation  fur  the  continuance  of  the  instrument,  notwithstand- 
ing any  change,  &c. 

The  following  examples  of  decisions  on  this  subject  will  be  useful. 

One  Teed,  gave  to  a  banking-house  a  guarantee,  ou  behalf  of  a  firm, 
expressed  as  follows  : — 

« I  hereby  agree  to  guarantee  to  you  the  repayment  of  any  bills  you 
may  honour,  to  be  drawn  upon  your  house  by  the  firm  of  Canuthers  & 
Co.,  of  Manchester,  distillers,  and  any  advances  you  may  make  for  the 
said  firm  of  Canuthers  &  Co.  from  time  to  time,  not  exceeding  the  sum 

•  vJ'00/.  This  guarantee  to  extend  to  any  current  amount  or  ultimate 
balance  not  exceeding  the  sum  of  8,000/.  and  interest,  and  to  continue 
in  force  for  one  year  from  the  date  hereof. 

"  Thomas  Teed." 

This  was  dated,  London,  June  29,  1839. 

<  me  of  the  firm  of  Carnitines  &  Co.,  having  retired  from  business,  a 
second  guarantee  was  given,  thus  expressed : — 

»  Notwithstanding  Mr.  John  Carruthers  has  retired  from  the  part- 
nership of  Carruthers  &  Co.,  of  Manchester,  distillers,  and  which  business 
is  QOW  carried  on  by  Mr.  Frederick  F.  Carruthers,  under  the  said  firm, 
<m  his  own  account,  I  do  hereby  agree,  in  consideration  of  your  giving 
credit  t<>  and  honouring  the  drafts  of  the  said  linn  of  Carruthers  &  Co., 
to  continue  the  guarantee  given  by  me  to  your  house  for  the  sum  of 
s, in  mi/,  fur  and  on  behalf  of  the  said  P.  F.  Carruthers  alone,  upon  the 
same  terms,  condition  and  period  as  expressed  in  the  guarantee  given  by 
your  house,  when  the  said  John  Carruthers  was  a  partner  in  the 
said  business.  This  guarantee  for  the  said  F.  F.  Carruthers  to  extend  to 
any  current  amount  or  ultimate  balance  not  exceeding,  as  to  my  liability, 
the  sum  of  8,000/.  and  interest,  and  only  to  continue  in  force  for  the 
•  ■  period  as  mentioned  in  my  former  guarantee. 

«  Thomas  Teed." 

This  Was  dated,   London,  27th  .January,  1840. 

During  the  year,  to  which  the  latter  guarantee  was  limited,  various 
payments  were  made  by  the  bankers  to  the  firm,  and  four  bills  of 
exchange,  of  differenl  dates,  amounting,  together,  to  the  sum  of  l,975Z. 
were  drawn  by '  !arruthers&  Co.,  payable  at  the  banking-house,  and  accepted 
by  the  hankers.  <  )n  March  1  1.  1840,  after  the  acceptance  of  the  four 
bills,  and  before  any  of  them  were  due.  one  of  the  partners  in  the  bank- 
r  ooA-i  ing-house  died,  there  being,  at  thai  time,  a  balance  ""(exclusive 
I  —  \  of  the  tour  bills)  of  124?.  10*.  7d.  due  from  the  bank  to  Carru- 
thers &  <  !o.  on  their  account. 

After  the  death  of  tfie  partner  in  the  hank,  the  same  course  of  business 
was  continued  between  the  bank  and  the  firm ;  but  on  June  15,  1840, 
Teed  gave  the  hank  notice  that  he  withdrew  his  guarantee.  On  Julj 
l.r>,  1840,  the  firm  of  Carruthers  .V  Co.  became  bankrupt. 


GUARANTEES,    BONDS,    ETC.,    GIVEN    TO    BANKERS.     179 

The  following  points  were  decided  on  these  facts : — 

1.  That  the  guarantee  ceased,  upon  the  death  of  the  partuer  in  the 
bank,  within  the  period  for  which  the  guarantee  extended. 

2.  That  bills,  accepted  by  the  bank,  before  the  death  of  the  partner, 
were  within  the  guarantee,  though  they  were  not  payable  until  after 
that  event. 

3.  That  the  amount  guaranteed  could  not  be  increased  by  any  act  of 
the  remaining  partners,  after  the  death,  and  the  customer;  although 
such  amount  might  be  diminished  by  such  act. 

4.  That,  in  the  construction  of  the  particular  terms  used  in  this 
guarantee,  it  could  not  be  held  that  the  amount  guaranteed,  in  respect  of 
the  bills  honoured  by  the  bank,  was  to  be  reduced,  by  the  balance  due 
to  the  customer  from  the  bank,  when  the  guarantee  ceased,  such  balance 
having  been  afterwards  paid,  in  the  course  of  business,  between  the 
bank,  after  the  death  of  the  partner,  and  the  customer. fy) 

Where  three  persons  carried  on  business,  as  partners  in  banking,  the 
partnership  being  to  expire  19th  February,  1807,  according  to  the  articles, 
dated  5th  January,  1792,  which  empowered  one  of  the  firm,  in  case  of 
his  death  during  the  term,  to  becpueath  his  share,  in  the  partnership,  in 
favour  of  his  wife  and  children.  That  partner  died,  26th  March,  1802, 
having  becpieathed  his  share,  &c,  to  executors,  in  trust,  &c,  accordingly. 
The  business  continued  to  be  carried  on  under  the  same  firm  as  before  ; 
and  the  executors  interfered  in  the  management,  and  shared  in  the 
profits.  Before  *the  death,  a  customer  and  two  other  persons,  r;j.99--. 
of  the  one  part,  and  the  members  of  the  banking  partnership,  L  -1 
of  the  other  part,  executed  an  indenture,  dated  4th  January,  1802,  by 
which  the  parties  of  the  first  part  did  jointly  and  severally  covenant  to 
pay  to  the  bankers,  the  survivors,  or  survivor,  of  them,  &c,  upon  demand, 
all  sums  of  money  not  exceeding  20,000?.  in  the  whole,  which  then 
were,  or  should  at  any  time  thereafter,  before  and  until  19th  February, 
1807,  become  due  and  owing  from  the  customer  to  the  parties  of  the 
second  part,  or  to  the  survivors,  or  survivor,  of  them,  &c,  either  for 
principal  money  then  already  lent  and  advanced,  or  thereafter,  within 
the  time  aforesaid,  to  be  lent  and  advanced,  or  for  interest  then  due  or 
to  become  due  thereon,  or  for  money  then  already  paid  or  lent,  or  there- 
after, within  the  time  aforesaid,  to  be  paid  or  lent,  &c. 

At  the  time  of  the  death,  the  balance  against  the  customer  was  upwards 
of  14,000/.;  after  the  death,  the  customer  continued  his  dealings  with 
the  bank,  as  before,  and,  within  a  few  weeks  after,  paid  in  more  than 
14,000/.,  but  within  the  same  period,  drew  out  a  larger  sum.  These 
subsequent  dealings  were  entered  in  the  same  account  current  with  the 
preceding  dealings,  under  the  same  heading,  &c. 

In  February,  1806,  the  customer  stopped  payment,  being  indebted  to 
the  bank  in  upwards  of  19,000/. 

Here  it  was  held,  that  the  banking  partnership,  which  carried  on 
business  after  the  death  of  one  of  the  partners  above  mentioned,  was  a 
new  partnership;  and,  therefore,  that  the   surety's   covenant   did   not 

(g)  Holland  v.  Teed,  7  Hare,  50. 


180         GRANT  ON  THE  LAW  OF  BANKING. 

i  xtend  to  cover  sums  advanced  b}'  such  new  partnership;  and,  that  the 
balance  due  to  the  bank  by  the  customer,  at  the  time  of  the  death,  must 
osidered  to  have  been  discharge  d,  by  the  subsequent  payments  made 
by  him  to  the  bank.f//) 

r*99fii  *Varianct  in  Agreement, — The  general  rule  is,  that  any 
L  -I  variance  in  the  agreement,  to  -which  the  surety  has  subscribed, 
which  is  made  without  the  surety's  knowledge  or  consent,  which  may 
prejudice  him,  or  which  may  amount  to  a  substitution  of  a  new  agree- 
ment for  a  former  agreement,  even  though  the  original  agreement  may, 
notwithstanding  such  variance,  be  substantially  performed,  will  discharge 
the  Burety.(t) 

Thus,  a  bond  given  to  secure  certain  bankers,  in  London,  against  all 
debts  that  might  be  incurred  by  a  firm  of  bankers,  in  the  country,  their 
correspondents,  and  executed  by  the  two  persons  composing  that  firm, 
and  a  third  person,  as  their  surety,  whereby  the  three  jointly  and  severally 
hound  themselves  to  repay,  &c,  such  sums  as  should  be  advanced  by  the 
London  bankers,  to  meet  bills,  etc.,  drawn  by  the  said  two  persons,  "  or 
<  Lther  of  them,"  was  held  not  to  extend  to  bills,  kc,  drawn,  by  one  of 
the  two,  after  the  death  of  the  other.(Z-) 

But,  if  a  bond  be  given  to  bankers,  to  secure  them  against  further 
advances,  so  that  these  further  sums,  together  with  those  already  advanced, 
should  not  exceed,  5,000?.;  and,  notwithstanding,  the  bankers  advance 
to  a  greater  amount;  that  will  not  be  construed  to  operate  as  vacating 
the  obligation;  for  the  contract  is  not  to  be  taken  as  a  prohibition  of  all 
subsequent  advances,  but  only  as  a  qualification  of  the  surety's  liability ;(/) 
express  and  clear  provisions  ought  to  have  been  introduced  to  effect  that 
object :(/)  and  in  an  action  (by  the  assignees  of  two  of  the  firm  of  bankers, 
to  whom  the  bond  was  given,)  on  it,  to  say  that,  after  the  making  of  it, 
the  partnership,  to  whom  it  was  given,  was  dissolved,  and  a  new  part- 
nership entered  into  by  the  two  and  a  third  person,  and  the  balance  due 
to  the  old  firm  was  transferred  to  the  new  one,  is  a  bad  plea;  and  the 
Burety  is  liable  to  the  assignees.(l) 

,  .,.,--,  * Continuing  Guarantee. — If  the  guarantee,  reciting,  in  the 
L  'J  condition,  an  agreement  by  the  bankers  to  discount  bills  of  ex- 
change,  and  otherwise  pay,  lend  and  advance  to  the  customer,  if  he 
should  have  occasion,  any  sums  of  money  not  exceeding,  at  any  one  or 
more  time  or  times,  200/.  in  the  whole,  undertakes  to  pay  to  the  said  A., 
B.  and  C.  (the  banker-,)  "  and  all  and  every  other  person  or  persons  who 

(h)  I'  ■•  Oakea,  4  Ruas.  154.    Bee,  in  case  of  incoming  partner,  Brooke 

v.  Enderby,  2  Bro.  x  II.  To:  and  when-  tit*-  security  was  given  by  a  banking  firm, 
and  oik-  of  the  partners  dies,  Bank  of  Set  In  ml  v.  Christie,  6  Cla.  &  F.  214. 
(/)  Bonar  v.  Macdonald,  ::  II   Lds.  226;  set   Btewarl  \.  M'Kean,  L0  Exch.675: 
in  v.  Chorlton,  'J  Drew.  333,  339  j  Woo  I  ixford  Railway  Company,  1 

I  521. 

(/.■)  Simson  v.  Cooke,  1  Bing.  452. 

Seller  r.  .lone-.  16  M.  .v  \V.  Ill';  Parker  v.  Wise,   6  M.  k  Selw.  247,  250; 
nea  v.  Clarke,  3  Q.  B.  194.     There  nee,]  not  be,  in  a  guarantee,  a  clause  re- 


GUARANTEES,    BONDS,    ETC.,    GIVEN    TO    BANKERS.    181 

shall  or  may  become  partner  or  partners  with  them  in  the  said  banking 
business,  or  any  or  either  of  them,  or  other  the  firm  of  the  said  house  for 
the  time  being,  &c,  all  and  every  such  sum  and  sums  of  money,  not  ex- 
ceeding the  sum  of  2001.  as  aforesaid,  as  the  said  A.,  B.  and  C.,  or  any 
or  either  of  them,  or  any  future  partner  or  partners  of  the  said  firm,  or 
other  the  firm  of  the  house  for  the  time  being,  should  advance  or  pay," 
&c,  this  is  a  continuing  guarantee  to  any  future  firm,  and  not  merely 
limited  to  the  first  occasion  on  which  the  advances  reached  200/.,  but  ex- 
tended to  future  advances. (m) 

In  this  respect — that  is,  in  respect  of  the  amount — the  courts  do  not 
lean  towards  the  side  of  the  guarantor;  for,  when  the  question  is  whether 
the  guarantee  is  qualified  or  continuing,  and  the  construction,  that  it  is 
a  continuing  one,  can  be  put  upon  the  words,  it  will  be.(ra) 

There  may  be,  however,  a  guarantee  on  which  the  surety  or  guarantor 
shall  only  be  liable  to  the  given  amount  once j  so  that,  if  200/.  have  been 
advanced,  and  200/.  paid  off,  he  is  no  longer  liable  for  any  thing,  (o) 

In  a  continuing  limited  guarantee,  given  to  the  National  *Pro-  r*2281 
vincial  Bank,  there  was  a  proviso,  that,  if  the  creditors  received  L  *" ""  J 
a  dividend,  from  any  estate  of  the  principal,  (the  customer,)  it  should  not 
be  taken  in  discharge  of  the  guarantee,  but  that  the  creditors  should  be 
entitled  to  recover,  on  the  guarantee,  to  the  full  extent  of  the  limit,  not- 
withstanding. 

On  the  bankruptcy  of  the  principal,  the  creditors  proved,  and,  before 
receiving  any  dividend,  obtained  payment,  from  the  guarantors,  to  the 
extent  of  the  limit. 

The  guarantors  were  considered  not  to  be  entitled  to  stand  in  the  place 
of  the  creditors,  as  to  so  much  of  the  proof  as  was  equal  to  their  pay- 
ment, the  creditors  not  having  yet,  at  the  time  of  the  application,  been 
paid  in  full.(p) 

In  a  case  where  merchants  procured  accommodation  from  their  bankers, 
on  entering,  with  sureties,  into  a  covenant  to  pay  the  floating  balance  due 
from  time  to  time,  up  to  a  certain  limited  amount,  subject  to  a  proviso 
that,  in  the  event  of  the  merchants'  bankruptcy,  and  in  the  event  of  the 
amount  due,  at  that  time,  exceeding  the  fixed  limit,  any  dividends  re- 
ceived, under  the  bankruptcy,  should  be  applied  exclusively  in  payment 
of  the  excess,  without  the  sureties  being  entitled  to  any  part  of  the  divi- 
dends, until  the  whole  of  such  excess  was  paid.  Some  of  the  sureties 
obtain  a  counter  security,  in  respect  of  their  liability,  &c,  without  notice 
to  the  bankers.  The  merchants  fail,  being  indebted  to  the  bankers  be- 
yond the  fixed  limit ;  the  latter  receive  dividends  on  the  whole  debt, 
and  recover  the  amount  secured,  from  the  sureties :  the  bankers  were 
held  to  be  entitled  to  retain  the  whole  sum  so  received,  although  two  of 
the  sureties  prove,  under  their  counter  security,  and,  in  effect,  are  paid 
in  full  out  of  the  bankrupts'  estate. (j) 

(m)  Batson  v.  Spearman,  9  A.  &  E.  298. 

(n)  See  Mayer  v.  Isaac,  6  M.  &  W.  612  ;  see  also  12  East,  228,  and  the  judgments 
in  Hitchcock  v.  Hunifrey,  6  Sc.  N.  R.  540. 

(o)  Kirby  v  Duke  of  Marlborough,  2  M.  &  Selw.  22. 

(p)  Ex  parte  Miles,  De  G.  Bank.  R.  623.  ......  *  *•     , 

\q)  Ex  parte  Hope,  3  De  G.  M.  &  G.  720.    In  general,  in  the  absence  of  stipula- 


182        OBANT  ON  THE  LAW  OF  BANKING. 

r*99Q~\  '^  "-1' '"' — Bankers  take  ;i  bond,  entered  into  jointly  and  seve- 
L  ""'  J  rally  by  four  partners,  and  two  Bureties  for  them,  payable  imme- 
diately, to  Beenre  the  payment  of  all  such  nuns  of  money  as,  upon  the 
balance  of  any  account  current,  between  the  partners  and  the  hank,  shall, 
from  time  to  time,  he  due  by  the  partners,  to  the  extent  of  1,0007.  The 
bankers  signed  separate  judgments  (having  also  taken  a  warrant  to  eon- 
judgment)  against  the  obligors:  hut  it  was,  nevertheless,  held  that, 
on  the  bankruptcy  of  the  partners,  they  were  not  bound  to  prove,  on  the 
separate  judgments,  against  each  of  the  bankrupts,  hut  that  they  might 
prove  against  the  joint  estate,  for  any  balance  that  might  be  due  within 
l,0oii/.' 

The  bond  here  was  not  taken,  it  will  be  observed,  for  any  existing 
simple  contract  debt;  if  it  had,  there  would  have  been  a  merger  in  the 
bond  :  and  then  the  bond  debt  would  have  merged  in  the  judgment. 

So,  where  the  original  contract  is  a  joint  one,  and  the  creditors  take  a 
joint  and  several  bond  from  the  debtors,  and  then  enter  a  joint  judg- 
ment on  the  bond,  there  is  a  merger  of  the  bond ;  and  there  could  be  no 
right  to  prove  against  the  separate  estate. 

But  the  difficulty,  in  respect  of  the  above  firstly  mentioned  bond,  is, 
that  it  is  not  the  joint  obligation  of  the  bankrupts  alone,  but  of  them  and 
two  other  persons,  who  must  be  presumed  to  be  alive ;  and  the  rule  is 
clearly  established,  that  you  cannot  prove  against  the  bankrupts,  if  the 
surety  be  alive  and  solvent. 

It  is  to  he  observed,  the  bank  was  the  creditor,  but,  in  fact,  the  bond 
was  given  to  two  persons,  as  trustees  for  them,  it  was,  therefore,  a  col- 
lateral security,  and  did  not  meige  the  joint  simple  contract;  it  is  a  bond 
from  the  six  to  the  two,  conditioned  to  be  void,  upon  payment,  by  the 
four  to  the  two.(V) 

A  joint-stock  banking  co-partnership  took  a  joint  and  several  bond, 
,  .,.,(|-.  given  to  two  trustees  for  them,  from  Beveral  *pereons,  viz.,  the 
L  J  four  members  of  a  trading  firm,  and  two  other  persons,  purport- 
ing to  secure,  to  the  bank,  all  and  every  such  sum  of  money  as,  upon 
the  balance  of  any  account  current,  which  then  was,  or  at  any  time  or 
times  thereafter  should  be  open  between  the  trading  firm  and  the  bank, 
at  any  of  the  establishments  of  the  bank,  Bhould  from  time  to  time  be 
due,  and  owing  from,  or  by  the  trading  firm,  their  executors,  &o., 
ther  with  all  discount,  postage,  and  commission,  according  to  the 
and  course  of  business;  but,  nevertheless,  to  the  extent  only  of 
1,000/.,  principal  money,  exclusive  of  interest  and  oosts,  in  case  such 

balance  should  ex< d  that  Bum.     The  bank  was  to  be  at  liberty  to  recover 

that  sum,  though  accounts  had  been  settled  between  the  parties,  and 
balances  had  been  paid  before  the  hank  proceeded  on  the  security;  and 
there  was  ■  warrant  of  attorney,  for  entering  up  judgment,  on  the  bond, 
in  order  the  better  to  secure  the  advances  which  Bhould  be  made.  The 
bank  entered  up  bu  several  judgments  against  the  obligors  of  the  bond, 

tion  to  the  contrary,  a  surety  paying  ti  ntitled  to  all  the  securities  held 

by  the  creditor  as  against  die  debtor]  Bee  I  De  Q.  Bank.  It.  623  . 

and  cases  cited. 

inks,  2  Jo.  &  L.  212. 


GUARANTEES,    BONDS,    ETC.,    GIVEN    TO    BANKERS.    183 

and  the  traders  having  became  bankrupt,  the  question  was,  whether  for 
the  balance  of  the  account,  as  it  stood,  at  the  date  of  the  bankruptcy, 
the  bank  was  at  liberty  to  prove  against  the  joint  estate  of  the  traders,  as 
for  a  simple  contract  debt;  and  it  was  decided  that  the  bank  might  do 
so,  the  original  liability  not  being  merged,  or  barred  by  the  bond,  or 
judgments,  for  the  bond  was  not  conditioned,  for  any  payment,  to  be 
made  by  the  six  persons  to  the  two  persons  to  whom  the  security  is  given, 
but  was  a  bond,  from  the  six  to  the  two,  conditioned  to  be  void,  upon 
payment,  by  the  four  to  the  bank,  and  was  therefore  only  further  and 
collateral  security. (s) 

Time  given  to  Principal. — It  may  be  laid  down,  apparently  without 
qualification,  that  where  a  joint  and  several  bond  is  taken,  by  way  of 
security,  that  time,  or  indulgence,  *has  been  given  by  parol  to  p231"l 
the  principal  debtor,  is  no  answer,  at  law,  on  the  part  of  an  ob-  L 
ligor,  who  has  executed  the  bond  as  surety  ;(t)  the  remedy,  if  any,  is  to 
be  sought  in  equity,  (-u) 

Where,  however,  there  has  been  an  absolute  release,  by  the  obligee,  to 
one  of  two  joint  and  several  obligors,  both  are  discharged;  also,  if  the 
obligee  releases  to  one  obligor,  and  the  other,  in  consideration  of  the 
forbearance,  undertakes  to  pay  the  debt,  the  debt,  nevertheless,  is  abso- 
lutely discharged,  (x) 

Such  a  transaction  as  the  following  may  be  mentioned,  as  one  that 
affords  a  warning  to  bankers,  taking  securities,  for  advances. 

If  A.  is  persuaded  to  execute  covenants,  for  repayment  of  a  loan,  to  a 
borrower  from  the  bank,  in  the  expectation  and  on  the  faith  that  B.  will 
also  execute  it  and  become  a  co-surety,  jointly  and  severally  responsible 
with  himself  and  the  borrower,  and  B.  never,  in  fact,  executes  the  deed, 
but  the  money  is,  in  fact,  advanced,  and  no  notice  of  B.'s  failure  to 
execute  is  given  to  A.,  until  the  principal  debtor  has  made  default  and 
become  insolvent,  A.,  in  equity,  is  discharged  from  all  liability,  and  will 
have  the  bond  given  up  to  him  to  be  cancelled. (y) 

In  fact,  a  principal  point  with  regard  to  guarantees,  taken  by  bankers, 
which  it  behoves  them  to  attend  to,  is  that  "giving  time,"  as  it  is  called, 
to  the  principal  debtor,  without  assent  of  the  surety,  discharges  the 
surety  ;  that  is,  if  the  principal  is  indulged,  with  more  time,  in  which 
to  discharge  his  debt,  than  is  according  to  the  known  course  of  dealing 
between  the  parties,  or  the  legal  obligation  of  the  debtor  in  the  circum- 
stances, then,  provided  that  indulgence  *does  not  arise  out^  of  r*232"l 
mere  inactivity  on  the  creditor's  part,  but  arises  out  of  a  binding  L  " 
contract,  which  prevents  the  creditor  from  being  in  a  condition  to  sue, 
for-  a  given  period;  that  lets  off,  or  discharges  the  surety,  and  relieves 

($)  In  re  Clarkes,  2  Jo.  &  L.  212  ;  compare  Ex  parte  Christie,  2  Deac.  &  C.  155 ; 
Holmes  v.  Bell,  3  Scott,  N.  R.  479. 

(t)  Davey  v  Prendergrass,  5  B.  &  A.  187  ;  Bulteel  v.  Jarrold,  8  Price,  467  ;  Trent 
Navigation  Company  v.  Harley,  10  East,  34. 

(u)  Parker  v.  Watson,  8  Exch.  410. 

(x)  Parker  v.  Lawrence,  Hob.  70;  Co.  Litt.  232,  n.  (26). 

{y)  Evans  v.  Brembridge,  25  L.  J.,  Ch.  102,  overruling  Ex  parte  Gifford,  6  Yes. 
805. 


L84         GRANT  OX  THE  LAW  OF  BANKING. 

him  from  all  liability  to  the  hanker,  to  whom  he  has  guaranteed  his 
principal,  (c) 

W.  Jones  gives  the  following  guarantee,  to  a  hank,  on  behalf  of 
Henry  Bowers : — 

Henry  Bower's  Mill  Account. 

"Please  to  open  an  account  with,  and  honour  the  cheques  of,  Mr.  H. 
Bowers  on  'mill  account,'  for  whom  I  will  be  responsible. 

«  Carmarthen,)  January  4,  1825.  W.  Jones." 

W.  Jones  was  an  attorney,  and  the  professional  adviser  of  the  bankers, 
and,  at  the  time,  had  a  banking  account  with  them.  The  bankers,  upon 
receiving  the  above  document,  opened  an  account  with  Bowers,  and  made 
various  advances  to  him  up  to  February,  1827,  when  they  ceased  to 
advance  to  him.  It  was  the  course  of  business,  of  the  banking  house, 
occasionally  to  take  the  acceptances  of  their  customers,  for  the  balance 
appearing  to  be  due,  on  the  face  of  their  accounts,  which  were  termed 
covers  ;  and  the  same  was  also  shown  to  be  the  practice  of  a  neighbour- 
ing bank.  Jones  was  proved  to  have  sometimes  been  consulted  by  the 
bankers,  as  their  professional  adviser,  with  respect  to  these  acceptances : 
but  it  was  not  proved  that  he  had  personally  any  knowledge  of  the  prac- 
tice to  require  these  bills,  as  covers,  for  overdrawn  accounts. 

In  February,  1828,  without  Jones's  knowledge,  or  consent,  the  bankers 
took  Bowers's  acceptance,  at  three  months,  for  846/.  14s.  Id.,  the 
amount  of  their  balance  against  him ;  and  this  bill  was  carried  to  the 
credit  of  his  account,  but  was  dishonoured,  at  maturity. 
r*ooQ-i  I'1  1832,  the  bankers  became  bankrupt,  and  in  an  action,  *by 
L  J  their  assignees,  against  Jones,  commenced  in  1*83,  it  was 
adjudged,  that  the  bankers,  by  taking  the  above  acceptance,  had  given 
time  to  Bowers,  the  principal,  and  thereby  had  discharged  Jones,  the 
guarantor  or  surety. (a) 

It  is  not  necessary,  for  the  bankers,  who  are  taking  the  guarantee,  to 
make  any  statements  how  the  account  has  been  kept ;  whether  the 
customer  has  been  in  the  habit  of  overdrawing;  whether  he  was  punctual 
in  his  dealings ;  whether  he  performed  his  promises  in  an  honourable 
manner;  unless  questions  be  particularly  put,  by  tlu  surety,  to  gain 
info  nihil,'*,  ,i  on  then  points,  on  all  which,  it  is  material  for  him,  not  to 
be  in  the  dark;  if  questions  are  put,  the  bankers  must,  of  course, 
answer  correctly;  otherwise,  it  would  probably  be  found,  that  the 
guarantee  would  be  ineffectual.(a) 

A  guarantee  was  given  by  a  person  to  the  Craven  Bank,  to  secure  all 

(z)  Samuel]  v.  Howorth,  2  Merir.  '-'78:  confirmed.  Creighton  v.  Rankin,  7  Cla. 
&  P.  346  Heath  v.  Key,  l  JT.  4J.  434;  Bee  Blake  v.  Wnite,  l  Y.  &  Col.  Ex.  Bq. 
423;  BadnaU  v.  Samuel,  3  Price,  534,  535. 

(a)  Howell  v.  Jon<  9,1  0.  M.  Ac  R.  07  :  see  Small  v.  Carrie,  2  Drew.  102, 114.  To 
Impeach  a  guarantee,  on  the  ground  of  concealmenl  of  material  facts,  such  con- 
ii  nt  must  lif  Bhown  to  be  fraudulent,  North  British  Insurance  Company  v. 
Lloyd.  LOEzch.  iailton  \.  Matthews,  LO  Ola.  &  F.  934  ;  Hamilton  v. 

Watson,  12  Ola.  &  P.  100;  Smith  v.  Hank  of  Scotland,  1  Dow.  272;  ami  per  Al- 
i.  B.,  10  Exch.  529;  Owen  r.  Human.  :;  Mac.  &  G.  378;  Price  v.  Barker,  4  E. 
ft  B.  760. 


GUARANTEES,    BONDS,    ETC.,    GIVEN    TO    BANKERS.     1S5 

sums  then  due,  or  which  might  hecome  due,  from  a  customer,  to  the 
extent  of  1,000/.,  providing,  that  if  the  guarantor  should  give  notice,  in 
writing,  to  the  bank,  determining  the  guarantee,  he  should  be  liable 
only  to  the  extent  aforesaid,  for  the  amount  due,  at  the  time  of  giving 
notice,  but  not  for  any  money  advanced,  or  liability  incurred,  by  the 
bank,  subsequent  to  such  notice. 

The  date  of  this  instrument  was  14th  February,  1850. 

The  customer,  subsequently,  when  the  balance  against  him  reached 
1,000/.,  and  on  a  further  advance,  by  the  bank,  of  300/.,  executed  a 
warrant  of  attorney  to  confess  judgment  for  2,600/.,  subject  to  a  defea- 
sance, on  payment  of  the  floating  balance  of  his  account,  not  exceeding 
1,300/.,  and  with  a  proviso  that  the  guarantee,  given  as  above  mentioned, 
should  not,  in  any  manner,  be  prejudiced,  or  affected,  by  the  warrant 
of  attorney. 

*The  date  of  this  instrument  was  19th  March,  1851,  and  con-  r*9g_n 
temporaneously  an  agreement  was  signed,  by  the  customer,  the  L  J 
guarantor  and  the  bankers,  whereby  it  was  agreed  that  the  memorandum 
of  guarantee  of  14th  February,  1850,  should  not  be,  in  any  manner, 
prejudiced,  or  affected,  by  the  execution  of  the  warrant  of  attorney,  or 
by  any  judgment  to  be  entered  up,  and  execution  issued  thereon,  and 
that  all  moneys  recovered,  under  the  warrant  of  attorney,  should  be  first 
applied  in  reduction  of  the  balance  of  the  banking  account,  of  the 
customer,  remaining  due  at  the  time  of  levying  the  execution,  before 
the  memorandum  of  14th  February,  1850,  should  be  capable  of  being 
performed,  or  satisfied,  by  the  guarantors,  either  wholly,  or  in  part,  to 
the  end  and  intent  that  the  guarantee  should  remain  effectual  to  the 
extent  of  1,000/.,  after  judgment  should  have  been  entered  up  on  the 
warrant  of  attorney,  and  execution  levied  in  pursuance  thereof,  and  the 
proceeds  of  such  execution  placed  to  the  credit  of  the  customer's  account. 
And  it  was  further  agreed,  "  that  for  the  privilege,  or  protection,  of  the 
guarantor,  in  addition  to  the  proviso  contained  in  the  memorandum  of 
14th  February,  1850,  for  discharging  him  from  continuing  his  responsi- 
bility, on  his  giving  notice,  to  the  bank,  or  his  desire  to  be  so  discharged, 
the  bank  should,  on  being  required  to  do  so,  in  writing,  by  the  guarantor, 
although  such  requisition  should,  in  nowise,  be  necessary  as  between 
the  bank  and  the  customer,  enter  up  judgment  on  the  warrant  of  attorney, 
and  levy  execution  against  the  goods  and  chattels  of  the  customer,  as 
soon  as  practicable,  and  apply  the  proceeds  of  such  execution,  in  reduc- 
tion of  the  balance  of  the  customer's  account. 

The  warrant  of  attorney  was  not  filed  pursuant  to  the  stat.  12  &  13 
Vict.  c.  106,  s.  136. 

On  24th  March,  1851,  judgment  was  entered  up  on  it. 

On  25th  August,  1851,  the  guarantor,  by  notice,  in  writing,  required 
the  bank  to  levy  execution ;  this  was  done,  and  goods  sold  under  it,  to 
the  amount  of  the  debt,  due  from  *the  customer  to  the  bank.  r*235~| 
Shortly  after  the  customer  became  bankrupt,  and  the  assignees  L 
recovered  back,  from  the  bank,  the  amount  levied  under  the  execution, 
by  reason  of  the  omission  to  file  the  warrant  of  attorney,  or  a  copy  of  it, 
according  to  the  provisions  of  the  above  statute.     The  bank  then  proved 


18G  GRANT    OX    THE    LAW    OF    BANKING. 

under  the  bankruptcy,  and  having  received  two  dividends,  of  7«.  6<f.  and 
Bd.  in  the  pound  respectively,  on  their  debt,  they  brought  an  action, 
against  the  guarantor,  on  the  guarantee;  but  it  was  held,  by  the  lords 
justices  in  equity,  that  the  agreement  to  issue  execution  was  valid  and 
binding,  but  that,  hy  tit,-  omission  to  file  the  warrant  of  attorney,  tire 
guarantor  was  discharged;  the  guarantor,  however,  having  pleaded  to 
the  action,  and  then  filed  a  bill,  to  Staj  proceedings  in  that  action,  and 
so  put  the  bank  to  unnecessary  costs,  could  only  have  a  stay  of  pro- 
ceedings,  on  the  terms,  of  paying  the  costs  at  law,  subsequent  to  the 
declaration.  (l\ 

A  customer,  having  overdrawn  his  account  with  his  bankers,  on  their 
requiring  security  from  him,  deposits  with  them  certain  title  deeds,  and 
prevails  ou  A.  to  join  him,  as  surety,  in  a  promissory  note  for  400/., 
payable  in  twelve  months,  to  the  bankers.  Soon  after  that  note  became 
due,  the  customer  and  A.  gave  the  bankers  another  jo  hit  note  at  twelve 
months,  dated  14th  April,  1813,  in  exchange  for  the  note,  which  had 
become  due,  and  the  customer  still  kept  a  running  account  with  the 
bank,  and,  in  the  course  of  that  twelve  montbs,  paid  in  very  large  sums. 
In  January,  1815,  the  customer  entered  into  a  composition  deed  with 
his  creditors,  whereby  bis  debts  were  compounded  for  ten  shillings  in 
the  pound.  The  last  note  was  stated  to  have  been  given,  with  an  express 
understanding,  that  the  surety  would  not  be  answerable  for  a  longer 
period  than  the  twelve  months.  Between  the  giving  of  the  note  and  the 
date  of  the  composition  deed,  the  surety  never  had  any  application,  made 
r*93Gl  to  *n*m>  respecting  the  note;  but,  in  1816,  a  person,  to  whom 
L  ""  -I  the  promissory  note  had  been  indorsed,  for  the  first  time, 
demanded  payment  of  the  surety,  who  took  no  notice  of  the  application. 
Several  months  afterwards,  the  note  having  been  returned  to  the  bankers, 
tiny  sued  the  customer:  and  the  court  held,  that  he  was  wt  discharged) 
for  that  the  onus  lay  on  him  to  take  care  that  the  note  was  satisfied  ;  that 
his  situation  had  not  been  changed  to  his  prejudice;  that  the  composi- 
tion was  for  his  advantage,  to  the  extent  of  ten  shillings  in  the  pound, 
as  much  as  if  the  bankers  had  received  so  much  from  him  in  part  pay- 
ment, and  that  the  time  that  had  elapsed,  and  the  want  of  earlier  notice, 
made  no  difference. (c) 

A  promissory  note  is  made  jointly  by  A.  and  B.,  to  secure,  to  a  bank, 
the  payment  of  advances  made,  by  them  to  A.,  to  the  extent  of  250J. 
The  note  was  made  payable  at  one  mouth.  After  it  became  due,  and 
without  the  privity  of  l>.,  it  was  agreed,  between  A.,  and  the  bankers, 
that  A.  should  execute  a  warrant  of  attorney  to  a  third  person,  as  trustee 
for  the  bank,  to  secure  the  amount  of  the  note,  and  of  a  further  advance, 
made  by  the  bank,  to  A. 

In  such  case,  the  note  does  not  merge  in  the  warrant  of  attorney. (J) 

Also,  the  acceptance,  by  the  hank,  of  the  fresh   security,  without  any 

Watson  v.  Mlcock,  4  Do  G-.  M.  k  ('..  242  :  Bee  Acraman  v.  Herniman,  20  L. 
.1..  Q.  I'..  •':■"..".:  gee  also  Parker  \.  Watson,  8  Bxch.  104. 

P(  rfe<  i  \.  Musgrave,  <;  Price,  ill :  in  this  case,  Reee  v.  Barrington  was  cited 
for  defendant ;  see  inf.  243. 
('/)  15.11  v.  Banks,  3  If.  &  Gra.  2a8. 


GUARANTEES,  BONDS,  ETC.,  GIVEN  TO  BANKERS.  187 

binding  engagement  by  tlieni  to  give  time  to  A.,  does  not  discharge  the 
surety  B.(r?) 

Here,  it  will  be  observed,  the  warrant  of  attorney  was  not  between  the 
same  parties  as  the  original  liability. 

On  April  25,  1803,  a  customer,  together  with  another  person,  executes 
a  joint  and  several  bond,  to  his  bankers,  to  secure  to  them  the  repayment 
of  the  sum  of  1,000/.,  (advanced  by  them  to  the  customer,)  with  interest, 
on  the  25th  April,  1804. 

*At  the  date  of  the  bond,  the  customer's  account  with  the  [-#997-1 
bank,  exclusive  of  the  above  sum,  advanced,  showed  a  balance  L  J 
in  his  favour ;  he  also  paid  money,  into  the  banking  house,  after  that 
date,  and  before  25th  April,  1804.  At  the  end  of  1804,  the  customer's 
account,  independent  of  the  1,000?.,  (which  was  not  repaid,)  was  over- 
drawn. In  January,  1807,  a  settlement  of  accounts  took  place,  between 
the  customer  and  the  bankers,  when  2,259?.  was  found  to  be  due  from 
him  to  them,  the  whole  of  the  1,000/.  secured  upon  the  bond,  being 
treated,  on  occasion  of  this  settlement,  as  a  debt  remaining  due  from 
him. 

The  bankers  then  agreed  to  give  him  time  for  payment,  on  his  giving 
security,  for  the  whole  balance ;  and  on  January  23,  1807,  he  executed 
a  warrant  of  attorney  to  the  bankers,  to  confess  judgment  against  him, 
for  the  payment  of  the  2,259?.  by  instalments,  several  of  which  he  paid, 
but  became  bankrupt  before  the  whole  was  discharged,  a  sum  of  1,100?. 
remaining  still  due. 

It  was  proved,  that  the  surety  was  privy  to  the  above-mentioned  settle- 
ment of  accounts,  and  to  the  facts  respecting  the  warrant  of  attorney. 

On  these  facts,  it  was  considered,  the  surety  was  not  discharged,  by 
the  time  given  to  the  customer,  and  that  the  bond  was  no£  discharged, 
by  the  payments  made  by  the  customer,  before  it  became  due,  &c,  for 
these  were  to  be  considered  as  made  on,  and  applicable  to,  the  banking 
account,  and  the  bankers,  being  entitled  to  hold  the  bond  and  warrant 
of  attorney,  as  distinct  securities. (e) 

But  where  bankers  took  a  bond,  from  a  customer  and  his  surety,  by 
which  it  was  stipulated  that  the  surety  was  to  be  liable,  only  to  the  extent 
of  6,000?.,  if  upon  the  account  that  amount  should  be  due,  and  subse- 
quently, the  balance  of  the  customer's  account  appearing  to  be  9,500?. 
against  him,  the  customer  gave  the  banker  a  mortgage  for  4,000?.,  and 
it  *was  agreed,  between  them,  that  the  residue  should  be  paid  r^si 
by  instalments ;  and  the  customer,  also,  gave  a  warrant  of  attorney  L  J 
to  confess  judgment  for  the  residue,  expressly  without  prejudice  to  any 
other  securities  held  by  the  hankers,  for  the  said  sum,  or  any  part  of  it: 
there  it  was  said,  that  it  may,  in  many  cases,  be  a  very  rational  provision, 
that  the  principal  shall  have  time,  provided  he  can  have  it  without  pre- 
judice to  the  remedy  against  the  surety,  which,  though  worth  nothing 
at  present,  may,  in  a  years's  time,  be  very  valuable,  and  the  creditor 


(d)  Bell  v.  Banks,  3  M.  &  Gra.  258. 

(e)  Tyson  v.  Cox,  Turn.  &  R.  395 ;  and  see  S.  C,  as  to  counter  indemnity  to 
surety  ;  and  see  Boultbee  v.  Stubbs,  18  Ves.  20. 


188  GRANT    ON    Till:    LAW    OF    BANKING. 

nrny.  very  reasonably,  ruean  to  secure  the  benefit  of  that  contingency; 
but  the  bankers  were,  nevertheless,  restrained  from  suing  the  Buiety.ff) 

Where  parties  are  acting  by  virtue  of  an  act  of  parliament,  to  which 
every  one  must  be  considered  as  subscribing,  and  tbere  are  provisions, 
opposed  to  the  supposition  that  those  to  whom  the  guarantee  is  given 
have  the  power  of  delaying  to  put  in  suit  the  instrument,  against  the 
surety,  upon  a  breach  occurring,  and  they  do,  nevertheless,  lie  by  and 
indulge  the  principal,  though  not  by  means  of  a  binding  contract,  still 
the  surety  will  be  absolved. (//) 

How  to  take  Guarantee. — It  is  indispensable,  in  order  that  bankers 
should  obtain  the  benefit  of  the  securities  tiny  take,  for  them  to  act,  not 
merely  with  perfect  openness  and  candour,  but  with  vigilance  and  cir- 
cumspection. Many  suppressions  and  unintentional  misrepresentations 
carry  with  them  the  effect  of  fraud,  both  at  law  and  equity,  and,  in  con- 
sequence, will  invalidate  transactions  otherwise  unquestionable;  much 
more  has  wilful  concealment  of  facts,  obviously  material  for  the  surety 
to  know,  previously  to  his  entering  into  the  contract,  the  effect  of  fraud, 
that  is  to  say,  it  will  vitiate  the  whole  transaction,  as  regards  the  bankers' 
p.9oqi  *power  of  recovery  from  the  surety.  The  following  case  supplies 
L         -I  an  instance  of  the  former  proposition. 

Certain  bankers  advanced  2,000^.  to  A.,  upon  the  security  of  an  in- 
denture of  mortgage  to  them,  of  certain  property  of  A.,  and  also  of  a 
joint  and  several  promissory  note  of  the  same  date  as  the  deed,  in  which 
a  third  party  joined  with  A.  as  surety.  At  the  time  of  this  advance,  A. 
who  had  long  been  a  customer,  owed  them  800J.,  and  it  was  arranged, 
between  him  and  the  bankers,  that  this  sum  should  be  deducted  from 
the  2,600Z.,  but  neither  by  the  recital  in  the  mortgage  deed,  nor  other- 
wise, was  the  surety  apprised  that  such  was  the  case,  and  that  recital, 
moreover,  expressly,  but  falsely,  stated,  that  the  entire  interest  in  a 
1,500A  policy  of  insurance,  already  deposited  with  the  bankers,  would 
be  available,  as  collateral  security,  for  the  2, GOO/.,  inasmuch  as  the  800/. 
had  been  repaid  to  the  bankers.  The  mortgage  deed  was  prepared  by 
the  bankers'  solicitor,  and  read  over  in  his  office,  to  the  surety  and  A., 
previously  to  its  execution,  and  to  the  surety's  signature,  of  the  promis- 
sory note.  The  circumstances  were  held  to  constitute  such  a  fraud  in 
law,  as  released  the  surety,(//)  although  it  was  not  suggested,  at  the  bar, 
that  any  intentional  fraud  was  imputable  to  the  bankers  personally. 

The  following  is  a  case  in  which  the  neglect  of  the  bankers  operated 
to  release  the  surety. 

Richard  Cox  was  a  banker,  in  co-partnership  with  Messrs.  Morrell, 
under  the  firm  of  Cox  and  Morrell.  He  was  also  engaged  in  collieries, 
with  one  DavieS,  under  the  linn  of  Cox  and  Davies. 

Cox  and  Morrell  were  in  advance  to  Cox  and  I>avics. 

Richard  Cox,  having  applied  to  hi-  partners  for  a  further  advance,  it 

(/)  Bonltbee  v.  Btubbs,  1  -  Ves.  20  :  Bee  1  E.  &  B.  773,  and  C  Dow,  238.     See 

•  terms  of  n  the  action,  Dawson  \.  L-awes,  l  Cay,  299. 

(g)  Bank  of  [reland  v.  Beresford,  8  D 

1    uij.ton,  5  Bing.  X.  0.  l  i-'  |  see  .:  B.  &  0.  606  ;  3  T.  R.  001. 


GUARANTEES,  BONDS,  ETC.,  GIVEN  TO  BANKERS.  189 

was  agreed  they  should  advance  a  further  sum,  upon  his  brother  John 
Cox,  becoming  security  for  the  repayment  of  3,000?. 

*John  agreed,  as  surety  for  Richard,  to  execute  a  joint  and  [-#94^-1 
several  bond  to  James  and  John  Morrell,  for  the  sum  of  3,000?.,  L  -J 
upon  having  a  counter  bond,  for  the  like  sum,  from  Cox  and  Davies,  to 
indemnify  him. 

A  joint  and  several  bond  was  executed  by  John,  but  not  by  Richard ; 
the  counter  bond  was  given  by  Cox  and  Bavies,  and  further  advances 
were  made  by  the  bank. 

Sometime  after  this,  Richard  ceased  to  be  a  partner  in  the  bank. 
The  bankers  were  considered  to  have  released  the  surety,  by  neglect- 
ing to  obtain  the  bond,  from  the  principal  debtor,  Richard  Cox. 

John  Cox  also  joined  with  Richard  in  signing  promissory  notes  to  Cox 
and  Morrell,  each  of  which  was  expressed  to  be  for  value  received,  by  a 
draft,  at  the  three  months's  date,  to  enable  Richard  to  meet  some  bills. 

John  signs,  as  surety  merely,  and  becomes  liable  upon  the  words  of 
the  notes,  on  a  contract,  whereby  Cox  and  Morrell  were  to  advance  the 
money,  upon  three  months'  credit.  But  the  advances  of  money  were 
actually  made,  not  by  drafts  at  three  months,  but  directly,  in  cash,  within 
that  time,  and  in  such  a  way  as  to  give  the  bankers,  upon  each  advance, 
an  immediate  demand  against  the  principal  debtor.  Thus,  the  right  of 
the  creditor  was  rendered  materially  diiferent,  as  against  the  principal, 
from  what  it  was.  intended  to  be,  by  the  surety. 

Therefore,  in  this  case  also,  they  released  the  surety ;  and  it  makes 
no  difference,  that  they  voluntarily  forbear,  to  demand  payment,  during 
the  three  months.  (?) 

Another  instance  of  a  release  of  surety,  by  the  bankers7  conduct,  is  the 
following. 

A  surety  joined,  with  a  customer,  in  a  joint  and  several  promissory 
note  for  500/.,  payable  to  the  bankers,  on  demand,  with  interest.  This 
note  was  made  about  1st  January,  1838,  *and  handed  to  the  poii-i 
bankers,  but  was  not,  at  that  time,  entered  in  their  books ;  and  »-  J 
it  was  not  until  9th  December,  1841,  that  the  500?.  was  placed  to  the 
credit  of  the  customer's  account;  on  that  day  it  was  so  placed,  but  as  of 
the  date,  12th  November,  1841,  at  which  date,  the  balance  appearing 
against  the  customer  was  about  96?. 

In  1843,  the  customer  became  insolvent,  being  indebted  to  the  bank, 
in  a  sum  exceeding  500?. 

It  appeared  in  evidence,  that  the  contract  was,  that  the  promissory 
note  should  be  deposited,  as  a  security,  for  the  amount  due,  from  the 
customer,  on  the  open  account;  it  was  kept  among  the  securities  of  the 
bank,  in  the  first  instance,  but  subsequently,  as  above  stated,  was  entered 
in  the  books  of  the  bank,  and  in  the  customer's  pass  book.  Now,  these 
latter  proceedings  evidently  altered  the  position  of  the  surety ;  they  were 
not  according  to  the  contract,  but  an  entire  violation  of  it ;  instead  of 

(i)  Bonser  v.  Cox,  4  Beav.  379;  S.  C,  6  Bear.  110;  see  In  re  Plummer.  1  Phill. 
56 ;  Ex  parte  Bowden,  1  Deac.  &  Chit.  135. 


LOO  GKAXT    OH    TIIE    LAW    OF    BANKING. 

being  liable  for  a  floating  balance  merely,  the  rarely  was  made  at  once 
liable  for  the  whole  5U0/.     This  was  a  release  of  the  surety. (/,•) 

The  following  is  a  case,  in  which  the  Bteps,  taken  by  the  bank,  were 
considered  notto  have  released  the  surety. 

A.  and  1>.  enter  into  a  joint  and  several  bond  to  guarantee  a  baukiug 
company,  which  bond,  reciting  that  B.  had  requested  the  company  to 
aeeept  and  discount  notes,  drafts  and  bills  of  exchange  for  him,  and  also 
to  bud  and  advance  to  him  such  sums  of  money  as  he  might  require  to 
carry  on  his  business,  and  also  to  keep  a  cash  and  running  account  with 
him,  iVc.,  declared  the  condition  to  be,  that  if  either  A.  or  B.  should 
pay,  to  the  company  such  sums  as  should  become  due,  on  the  above 
respects,  the  bond  was  to  be  void. 

Sometime  after  the  execution  of  the  bond,  the  company,  by  deed,  "  re- 
mised, released  and  for  ever  discharged  the  customer,  B.,  of  and  from  all 
pKMo-i  manner  of  action,  causes  of  action,  *suits,  debts,  dues,  sum  and 
L  ~  ~J  and  sums  of  money,  claims  and  demands  whatsoever,  at  law  and 
in  equity,''  with  proviso  "  that  nothing  in  the  deed  contained  should 
prevent  the  company  from  suing  or  prosecuting  any  person  who  is,  jointly 
or  severally,  bound  with  B.  in  any  bond,"  &c,  and  stating  it  to  be  under- 
stood and  agreed  that  the  deed  should  not  ©perate  or  be  pleaded  in  bar, 
or  as  a  release. 

This  deed  was  executed,  without  the  knowledge  or  consent  of  A.,  the 
surety. 

.Nevertheless,  the  deed  was  held  not  to  operate  to  discharge  A.;  to 
operate  not  as  a  release,  but  merely  as  a  covenant  not  to  sue  B.,  the  cus- 
tomer; and  that  A.  was  liable,  in  regard  to  breaches,  accruing  before 
the  execution  of  the  deed.(/) 

Again,  an  arrangement  with  the  customer,  by  which  the  bankers 
intend  to  secure  themselves,  may,  if  unknown,  or  withheld  from  the 
knowledge  of  the  guarantor,  frequently  defeat  the  object  of  the  guarantee 
altogether.  Thus,  if  a  banking  company  agree,  upon  receiving  the  guar- 
antee of  a  particular  person,  they  will  advance  a  certain  sum,  for  the 
purpose  of  securing,  to  the  creditors  of  a  trader,  a  composition  of  ten 
shillings  in  the  pound,  and  of  enabling  the  trader  to  carry  on  his  busi- 
ness, and  at  the  same  time,  being  themselves  creditors  of  the  trader, 
enter  into  a  Becret  arrangement  with  him  and  others,  purporting  to  secure 
to  themselves  repayment  of  the  difference  between  the  composition  and 
the  full  amount  of  his  debt  to  them,  that  is  a  fraud,  upon  the  guarantor 
and  upon  the  creditors,  who  execute  the  composition  deed  releasing  the 
trailer  on  the  faith  of  the  ostensible  agreement,  and  the  guarantee  will 
be  se<  aside  in  equity. 

If,  in  such  case,  there  be  several  guarantors,  and  on  the  construction 
r*oi^i  of  the  term-  of  the  memorandum  of  guarantee,  there  is  no  right 
L  J  of  contribution   among  them,    any   one  of  them  *may  sustain  a 

(A;)  Archer  v.  Hudson,  T  Beav.  551,  564  :  affirmed  Ld.  Cbanc.  15  L.J.  (N.  S.) 
Ch.  211;  see  Bonsi  r  r.  Cox,  6  Beav.  110. 

Price  v.  Barker,  l  K.  .v  I!.  760,  where  a  great  number  of  cases  are  reviewed. 
to  Burety  recovering  from  principal,  Kearsley  v.  <.'<>le.  16  m.  &  \\.  128;  ;mj 
see  4  II.  Lds.  1011. 


GUARANTEES,  BONDS,  ETC.,  GIVEN  TO  BANKERS.  191 

bill  in  equity,  to  set  aside  the  guarantee  for  fraud,  without  joining  the 
concurrent  guarantors,  (m) 

And,  although  there  might  be  no  fraudulent  concealment  of  the 
arrangement  between  the  bank  and  the  customer,  yet,  on  grounds  of 
public  policy,  the  banker  would  be  prevented  from  retaining  his  secu- 
rity, in  addition  to  the  amount  of  the  composition,  upon  the  customer's 
original  debt  to  him.(nj 

Bankers,  in  taking  guarantees,  ought  to  be  careful  to  observe  the  prin- 
ciple which  has  been  laid  down  by  the  House  of  Lords,  which  is  this — 
although  a  creditor  may  not,  in  every  case,  be  bound  to  inquire  into 
the  circumstances  under  which  a  third  person  becomes  surety  to  him, 
he  is  so,  when  the  dealings,  between  the  parties,  are  such  as  to  lead  to 
suspicion  of  fraud. (o) 

It  does  not,  however,  follow  from  anything  said  above,  that  in  no 
circumstances  can  a  banker  give  time  to  a  principal,  in  case  of  gua- 
rantee, from  a  third  party ;  on  the  contrary,  it  is  a  general  rule  that  a 
creditor  may  give  time  to  a  principal  debtor,  without  prejudicing  his 
right  against  the  surety,  provided  he  expressly  reserves  such  right; 
circumstances,  however,  may  prevent  that  rule  from  having  effect,(j?) 
and  hence  it  is  always  perilous,  though,  perhaps,  not  unusual,  for 
bankers  to  indulge  a  customer,  in  such  circumstances,  with  a  little 
delay;  it  ought  never  to  be  done,  without  first  ascertaining,  that  the 
circumstances  are  such,  as  to  make  it  a  safe  course  to  adopt,  without 
endangering  their  claims  upon  the  surety. 

Compositions,  &c.  with  Creditors. — Compositions  with  creditors  fre- 
quently give  occasion  to  consider,  whether  a  bank,  by  becoming  a  party 
to  the  deed  of  composition,  may  *not  release  a  guarantor  of  r^j^-i 
advances,  made  by  them,  to  the  debtor.  The  following  case  is  L  -I 
an  illustration  of  this  : — 

A.  executes  a  deed  to  a  joint  stock  banking  copartnership,  by  which 
he  covenants  to  guarantee  the  bank  from  all  loss  or  damage,  &c.  that 
might  arise,  &c.  to  them,  on  the  account  of  a  firm  of  B.  &  Co.,  with  them. 

When  the  bank  sues  A.  on  this  covenant,  he  pleads  that  one  H., 
then  being  a  member,  partner  and  shareholder  in  the  said  banking 
copartnership,  and  being  also  duly  authorized  by  the  banking  copartner- 
ship, had,  after  the  debt  had  become  due  to  them,  from  B.  &  Co.,  for 
himself  and  for  the  said  copartnership,  executed,  &c.  the  composition 
deed,  acquitting  the  said  B.  &  Co.  from  all  actions,  claims  and  demands 
which  he,  H.,  and  the  said  banking  copartnership  then  had,  or  might 
have,  by  reason  of  the  debt  then  due  to  the  said  banking  copartnership, 
and  that  the  said  deed  was  made  with  the  privity  and  consent  of  the 
said  defendant  A.,  and  therefore  he  was  discharged  of  all  liability  on 
the  guarantee ;  but  it  appeared  that  H.  executed  the  deed  in  his  own 
name  only,  and  that,  at  the  time  of  his  execution  of  it,  there  was  a 

(m)  Pendlebury  v.  Walker,  4  Y.  &  Coll.  Ex.  Eq.  424. 

(n)  Cullingworth  v.  Lloyd,  2  Beav.  385  ;  see  Rees  v.  Berrington,  2  Ves.  jun.  543  ; 
Lee  v.  Lockhart,  3  My.  &  C.  316. 

(o)  Owen  v.  Homan,  4  H.  Lds.  997,  1034. 
(p)  Owen  v.  Homan,  4  H.  Lds.  997. 

February,  1857. — 14 


192  1 1  B  A  N  T    ON    THE    LAW    OF    B  A  X  K  I X  G. 

separate  debt  due  from  B.  to  him,  which  accounted  for  his  execution  of 
it,  and  that  the  banking  company,  never  having  themselves  executed,  01 
authorized  any  one  to  execute  for  them,  tin-  deed  of  composition  and 
release,  had  not  acquitted  the  principal,  B.  &  Co.,  of  the  debt,  and, 
consequently,  had  retained  their  rights  against  the  guarantor,  and  were 
entitled  to  recover  upon  his  covenant. (o) 

Now,  here,  if  H.  had  been  a  member  of  an  ordinary  banking  part- 
nership, and  there  had  been  no  separate  debt,  due  from  13.,  to  him,  it 
would  have  been  different,  because  one  member  of  a  common  law  part- 
nership  may  release  a  debt  due  to  the  partnership,  M  and  by  so  doing 
bar  his  copartners  from  recovering  it,  and  in  such  case  the  guarantor, 
..  *under  the  circumstances  alleged,  viz.,  that  the  release  WM 
L  J  made  with  his  privity  and  assent,  would  have  been  absolved : 
but.  perhaps,  if  there  had  been  a  separate  debt,  the  release  by  H.,  even 
in  ease  of  an  ordinary  partnership,  would  have  imported  a  release  of 
that  debt  only.(.s) 

In  the  ensuing  case  a  guarantee  was  given,  by  deed,  to  the  banking 
company,  under  somewhat  similar  circumstances. 

A.  becomes  surety,  by  a  deed  of  guarantee,  to  the  banking  company, 
called  the  "Commercial  Bank  of  England,"  for  the  repayment,  to  the 
amount  of  5007.,  of  advances  made,  and  to  be  made,  by  the  company, 
to  B.  Sometime  afterwards  B.  assigns,  by  deed,  all  his  property,  in 
trust  for  the  benefit  of  his  creditors,  the  banking  company  being  parties 
to  the  deed,  which  contained  a  covenant,  by  the  creditors,  not  to  sue  B., 
lur  any  debts  then  owing  by  him  to  them,  subject  to  a  proviso,  that  any 
creditor  having  any  specific  lien  or  security,  for  his  demand,  might 
execute  the  deed  without  prejudice  to  the  same  security,  &c. 

A.  was  afterwards  called  upon,  by  the  bank,  to  pay  on  his  guarantee 
the  500/.  with  interest,  which  he  paid,  and  afterwards  brought  an  action, 
against  B.,  to  recover  back  the  money,  as  being  paid  to  his  use. 

Now,  the  plaintiff  A.  had  executed  the  deed  of  assignment,  B.  being 
separately  indebted  to  him,  and  the  fact  of  his  having  done  so,  was  held 
to  I"'  evidence,  of  his  assent  to  the  reserve  of  remedies,  contained  in  the 
proviso.  Therefore,  the  abstract  question  in  the  case  was,  "  what  is  the 
effect  of  a  discharge  with  a  reserve  of  remedies  consented  to  by  the 
surety  V  It  was  considered,  as  settled,  that  a  reserve  of  remedies, 
without  such  consent  prevents  the  discharge  of  a  surety,  which  would 
otherwise  be  tin'  result,  of  a  composition  with,  or  giving  time  to,  a 
debtor,  by  a  binding  instrument.  Then,  that  such  consent  has  not  the 
■  of  discharging  the  surety  a-  to  the  creditor,  was  considered  to  bo 
char;    indeed,    it    was    said    t"   afford    an    additional   reason   against  the 

discharge. 

,  *Then,  in  this  case,  as  there  was  no  stipulation  that  the  surety 
L  J  should  stand  in  tie  creditor's  place,  (in  which  case,  perhaps,  he 
might   have  been  prevented,  at  least  in  equity,  from   recovering  over 

(y)  Bain  v.  Cooper,  0  M.  k  W.  701. 

(/•j  See  Ruddock's  case,  6  Rep.  26  j  and  compare  Brook  v.  Stuart,  'J  A.  &  E. 
854. 

(*)  See  per  Ld.  Abinger,  C.  B.,  9  M.  i:  W.  707. 


GUARANTEES,    BONDS,    ETC.,    GIVEN    TO    BANKERS.    193 

against  the  principal,)  and  nothing  more  than  the  single  act  of  assent, 
above  mentioned ;  it  was  held,  clearly,  that  the  surety  was  entitled  to 
recover  against  the  defendant,  the  sum  he  had  paid,  on  the  guarantee, 
to  the  bank.(tf) 

The  following  is  another  case,  arising  upon  arrangement  with  credi- 
tors : — 

A  customer,  as  security  for  advances  made  him,  by  his  bankers, 
indorses,  to  them,  promissory  notes,  made  by  B.  Before  the  notes  are 
due,  A.  stops  payment,  and  a  deed  was  executed  by  him  and  several  of  his 
creditors,  among  whom  were  the  bankers,  whereby  his  aifairs  were  placed 
in  the  hands  of  inspectors,  and  the  creditors,  parties  to  the  deed,  agreed 
not  to  call  for,  or  compel,  payment  of  their  respective  debts,  due  from 
him,  for  three  years.  After  the  execution  of  this  deed,  and  whilst  the 
notes  were  still  running,  B.  assented,  in  writing,  to  the  creditors  execut- 
ing the  deed,  and  giving  time  to  A.,  without  prejudice  to  their  claims 
on  B.  This  had  the  effect  of  reviving  the  liability  of  B.,  in  favour  of 
the  bank  (and  the  other  creditors,)  although  the  assent  of  B.  was  given, 
after  the  execution  of  the  deed,  which  had  taken  place,  in  the  first 
instance,  without  the  privity  of  B. ;  for  it  was  sufficient  that  the  assent 
to  the  forbearance  should  be  given,  at  any  time,  before  the  notes  became 
due.(w) 

Now,  probably,  in  this  instance,  the  bankers  would  have  been  better 
advised,  to  have  obtained  the  assent  of  B.,  to  their  execution  of  the 
deed  beforehand;  for,  in  such  case,  B.  would,  probably,  have  been 
advised,  that  there  was  no  room  whatever  for  contesting  the  bankers' 
claim. 

*A  further  question  was  mooted  in  this  case,  whether  a  deed  „,,,„ 
could  be  executed  effectually,  so  as  to  bind  the  banking  house,  L  -I 
by  one  of  the  partners  signing  "  for  self  and  partners,"  but  it  became 
unnecessary,  for  the  court,  to  pronounce  any  opinion  on  the  point;  but 
it  is  certainly,  in  general,  most  hazardous  for  bankers,  in  partnership,  to 
execute  deeds,  in  any  other  mode,  than  by  each  partner  sealing  and  de- 
livering the  deed,  as  his  act  and  deed ;  for,  in  general,  the  law  is,  that 
one  partner  has  no  authority,  to  bind  the  partnership,  by  deed,  and, 
unless  he  were  authorized,  by  a  power  of  attorney,  executed  by  each  of 
the  others,  or  by  separate  powers  of  attorney,  to  do  so,  his  execution 
would  be  inoperative,  in  any  case,  where  it  was  necessary  to  show  a  deed 
executed  by  the  partnership. 

In  equity,  it  is  quite  clear,  that  a  person,  having  a  valid  security  for 
his  debt,  but  having  been  induced,  by  his  debtor,  to  execute  an  instru- 
ment, legally  affecting  such  security,  under  a  representation  that  such 
would  not  be  the  effect,  and  a  promise  that  it  should  not,  is  not,  upon 
the  application,  to  a  court  of  equity,  of  the  debtor,  to  be  deprived  of  such 
original  security. (x) 

(t)  Kearsley  v.  Cole,  16  M.  &  W.  128.  It  makes  no  difference  that  A.  was  him- 
self, at  the  date  of  the  guarantee  and  since,  a  member  of  the  banking  copartner- 
ship ;  S.  C. ;  see  1  &  2  Vict.  c.  96,  s.  1. 

(u)  Smith  v.  Winter,  4  M.  &  W.  454. 

(x)  Lee  v.  Lockhart,  3  My.  &  C.  316. 


194         GRANT  ON  TUE  LAW  OF  BANKING. 

At  law,  when  a  customer,  and  another  person,  as  his  surety,  sign  a 
joint  and  several  promissory  note,  payable  to  the  bankers,  to  secure 
them,  &e.,  and  they  afterwards  execute  a  composition  deed,  whereby,  in 
consideration  of  four  shillings  in  the  pound,  the  bankers  and  other  credi- 
tors release  the  customer,  from  the  payment,  of  the  debts  respectively  set 
opposite  their  names;  and  the  amount  of  the  promissory  note  was  set 
opposite  the  bankers'  names;  the  deed  also  containing  an  express  clause, 
that  it  should  not  operate  to  invalidate,  prejudice,  or  affect  any  bonds, 
bills,  notes,  or  other  securities,  &c,  joint  or  several,  &c.,  as  to  the  claim 
against  any  such  surety,  the  deed  was  clearly  held  not  to  release  the 
r*9481  suretJ  >  there  being  no  fraud  on  the  other  creditors,  *since  the 
L  "  J  clause  appearing  on  the  face  of  the  deed,  all  who  executed  the 
deed  must  be  taken  to  be  aware  of,  and  agree  to,  the  reservation  of  the 
rights  against  sureties. (y) 

<  lases  of  composition  with  creditors  frequently  occur,  in  which  the 
interests  of  bankers,  upon  guarantees,  are  deeply  concerned,  and  the 
form  in  which  such  guarantees  are  expressed  ought  always  to  be  such, 
that  the  bankers  shall  be  secured  of  a  priority  of  repayments  of  advances, 
&c,  over  the  creditors,  under  the  composition  deed.  For  this  purpose, 
it  is  necessary  that  the  guarantee  should  not  be  made  conditional  to 
repay,  on  failure  of  the  traders  to  repay,  but  absolute.  An  illustration 
will  be  found,  in  the  following  case,  in  which  the  bankers  sued  the 
trustees,  under  the  composition  deed,  to  recover  the  amount  of  their 
advances,  &c. 

Carr  and  Co.,  being  insolvent,  compounded  with  their  creditors,  by 
agreeing  to  pay  them  a  composition  of  seven  shillings  and  sixpence  in 
the  pound,  at  three  instalments,  and  execute  a  conveyance  of  their  real 
and  personal  estate  to  certain  trustees, — the  defendants  in  the  action, — 
in  trust,  to  permit  them,  C.  and  Co.,  to  carry  on  the  business,  subject  to 
the  control  of  the  defendants,  and  to  pay  thereout,  to  the  creditors,  the 
said  three  instalments;  and,  in  case  of  full  payment  thereof,  to  reconvey 
and  reassign  the  estate  to  C.  and  Co.,  but,  upon  default  of  such  payment, 
then  in  trust  to  sell,  and,  after  deducting,  out  of  the  proceeds,  interest, 
costs,  and  amount  of  mortgages,  &c,  to  divide  the  remainder  amongst 
themselves  and  the  other  creditors. 

C.   and  Co.   continued,  accordingly,  to   carry  on   the   business,  and 
r*24xn  opened  an  account  with  a  banking  company,  from  *whom  they 
J  obtained   Iar-e    .chances.      The    bank   applied    to,   and    obtained 
from,  the  defendants,  the  following  guarantee: — 

"C.  and  Co.,  having  assigned  over  all  their  real  and  personal  estate  to 

us,  in  trust,  for  securing  a  composition  of  .-even  shillings  and  sixpence 

in  the  pound,  to  their  several  creditors  executing  such  deed,  and  it  being 

ary  to  open  a  banking  account,  for  the  purpose  of  carrying  on  the 

said  trade,  in  order  thai   the  stock  and  goods  on  hand  may  be  wrought 

North  v.  Wakefield,  13  Q.  B.  636.     A-  to  t  he  mode  of  executing  such  a  deed 

inking  copartnership,  see  Smith  v.  Winter,    1    If.   k  \V.  457.      It  would  be 

thai  one  of  the  partners  shonld  execute  it  "for  self  and  partners,"  id.  460, 

C,  as  to  revival  of  liability  of  sup  pleading  reservation  of  remedy. 

against  surety,  in  such  case,  Davidson  v.  M'Gregor.  8  M.  .v  \V.  755. 


GUARANTEES,    BONDS,    ETC.,    GIVEN    TO    BANKERS.     195 

up  and  converted  into  money,  for  the  purpose  of  paying  such  dividends  ; 
and  you  having,  at  our  request,  consented  to  open  a  banking  account, 
on  the  credit  of  the  names  of  the  said  C.  and  Co.,  or  of  any  person  or 
persons,  for  the  time  being,  carrying  on  that  concern;  we  do  hereby 
promise  and  engage,  that  any  sum  or  sums  of  money  to  become  due  to 
you,  or  to  the  said  banking  company,  in  respect  of  such  account,  shall, 
in  the  first  instance,  be  paid  to  you  out  of  the  net  proceeds  of  the  said 
trust  estate,  so  far  as  the  same  will  extend  to  pay." 

Further  advances  were  made,  by  the  bank,  to  C  and  Co.,  subsequent 
to  this  guarantee. 

The  defendants,  subsequently,  sold  the  property  of  C.  and  Co.,  under 
the  provisions  of  the  composition  deed,  and  the  proceeds  were  insufficient, 
to  pay  the  creditors,  the  composition  of  seven  shillings  and  sixpence  in 
the  pound. 

Held,  that  the  meaning  of  the  guarantee  was  not  that  the  defendants 
should  be  liable,  to  the  bank,  only  out  of  the  proceeds  realized,  from  the 
estate  of  C.  and  Co.,  after  payment  of  the  composition  of  seven  shillings 
and  sixpence,  to  the  creditors,  but  that  they  were  liable,  in  the  first  in- 
stance, to  repay,  out  of  the  proceeds,  the  whole  amount  of  the  advances, 
made  by  the  bank,  to  C.  and  Co.,  as  well  before  as  after  the  guarantee^) 
and  the  guarantee  was  held  to  extend  to  advances  made  before  it  was 
given,  notwithstanding  the  objection  was  pressed  upon  the  court,  that 
the  recital,  stating  it  *to  have  become  necessary  to  open  an  ac-  r*2501 
count,  &c,  pointed  only  to  future  advances.^)  L         J 

Bankruptcy. — Where  bankers,  with  knowledge  of  an  act  of  bank- 
ruptcy committed  by  their  customer,  took  a  guarantee  from  a  surety,  to 
secure,  to  the  extent  of  bOl,  all  sums  then,  or  thereafter  to  become,  due 
from  the  customer,  the  surety  having  no  notice  of  the  act  of  bankruptcy, 
and  the  surety,  afterwards,  paid  to  them  the  full  sum  for  which  he  was 
guarantor,  without  specifying  whether  it  was  to  be  applied  to  a  certain 
portion  of  the  bankers'  claim  (which  was  held  not  to  be  provable  under 
the  fiat,)  or  to  the  other  portion,  which  was  provable,  the  court  con- 
sidered that  this  payment  ought  to  go  in  reduction  of  that  part  which 
was  provable.  For  want  of  notice  of  the  act  of  bankruptcy,  which  con- 
sisted in  making  over  all  the  customer's  property,  to  the  bankers,  by 
means  of  a  bill  of  sale,  the  surety  was  considered  not  to  be,  either  when 
the  guarantee  was  given,  or  when  payment  was  made  upon  it,  on  equal 
terms  with  the  bankers :  and,  therefore,  if  the  payment  was  held  to  be 
applicable  to  that  portion  of  the  bankers'  claim  which  arose  after  the  act 
of  bankruptcy,  so  that  the  payment  could  not  be  made  the  subject  of 
proof  against  the  bankrupt's  estate,  justice  would  not  be  done  as  between 
the  bankers  and  the  guarantor,  and  the  payment  was  held  to  be  appli- 
cable to  the  discharge  of  a  part  of  the  claim  which  was  provable  against 
the  estate,  viz.,  to  the  part  of  it  which  was  incurred  previously  to  the 
act  of  bankruptcy,  (a) 

(z)  Wilson  v.  Craven,  8M.&W.  584,  595. 

(a)  Ex  parte  Sharp,  3  M.  D.  &  De  G.  490.  504,  where  the  V.  Chanc.  seems  to 
have  considered  the  facts  to  amount  to  fraudulent  concealment  by  the  bankers. 
See  North  British  Insurance  Company  v.  Lloyd,  10  Excb.  521,  533.  See  Supra, 
P-  233. 


196        OBANT  ON  TnE  LAW  OF  BANKING. 

Trusts. — There  are  cases  in  which  a  tru-t  prevails  over  a  security  given 
r*.)-i-i  tM  ■  hanker,  so  as  to  oust  the  hankers  of  *remedy  upon  the  secu- 
L         -I  rity,  although  the  bankers  had  no  knowledge  of  the  trust. 

Tims,  if  an  executor  and  trustee,  under  a  will,  lends  a  sum  of  money, 
i)f  which  he  is  trustee,  to  a  third  party,  on  the  promissory  note  of  that 
party,  made  payable  to  the  executor  only,  and  afterwards  becoming  em- 
barrassed, indorses  the  note  to  his  banker,  (who  is  also  the  banker  of  the 
maker  of  the  promissory  note,)  as  security  for  advances,  the  banker 
having  no  knowledge  of  the  trust,  then,  as  the  banker  acquires  only  an 
equitable  title  to  the  note,  and  therefore  no  better  title  to  it,  or  to  the 
money  secured  by  it,  than  the  executor  could  confer,  consequently  he 
acquires  no  title  at  all,  as  against  the  persons,  for  whom  the  executor 
was  trustee. (J) 

Also  a  right  of  set-off  may  override  the  banker's  claim  for  security. 
Thus,  if  the  above  promissory  note  had  been  given,  by  the  maker,  for 
money  lent  by  the  executor,  in  his  own  right,  and  the  maker  had  after- 
wards become  a  creditor  of  the  executor,  for  goods  sold  to  him  in  his 
own  right,  the  set-off  of  the  maker  must  have  taken  precedence  of  the 
banker's  claim  upon  the  note. (b) 

In  the  first  case,  subject  to  the  trust;  in  the  second,  to  the  set-off; 
the  banker  has  a  lien  on  the  moneys  of  the  maker  of  the  note,  in  his 
hands,  which  may  be  effectual,  as  far  as  it  goes,  to  discharge  the  debt 
on  the  promissory  note,  which  had  been  assigned  to  him.(i) 

A  father  and  son  gave  a  joint  and  several  promissory  note,  to  secure 
a  balance  due,  from  the  son,  to  the  bank.  Soon  afterwards,  the  son 
assigned  all  his  property  to  trustees,  for  the  benefit  of  his  creditors,  who 
were  expressed  to  be  parties  to  the  assignment,  and  to  be  named  in  a 
schedule,  and  the  deed  purported  to  contain  an  absolute  release  of  the 
debts,  without  any  reservation  of  rights  against  sureties.  One  of  the 
trustees  was  a  partner  in  the  banking  house,  and  the  deed  was  executed 
by  him  and  the  other  trustees,  but  not  by  any  other  creditor.  It  was 
r*>-->-|  a^so  executed  by  the  son,  *with  the  privity  and  concurrence  of 
L  "'  -I  the  father.  The  son  was  adjudicated  a  bankrupt,  upon  the  exe- 
cution of  the  deed,  as  an  act  of  bankruptcy. 

Held  that,  even  assuming  the  father  to  have  joined  in  the  promissory 
note, as  surety  merely,  and  the  partner  in  the  bank  to  have  executed  the 
deed  as  creditor,  and  not  merely  as  trustee,  the  father  was  not  released, 
there  being  do  reason  to  think,  but  every  consideration  pointing  the 
other  way,  that  any  one  intended,  or  anticipated,  the  partner's  execution 
of  the  deed  having  thai  effect. 

It  *.a~  also  recognized,  as  a  general  rule,  that  b  Burety,  who  has  con- 
enrred  in,  or  ratified,  an  arrangement  between  the  creditor  and  the  prin- 
cipal debtor,  cannot  claim  to  he  discharged  lathe  effect  of  that  arrange- 
ment, though,  in  some  cases,  it  may  be  necessary  that  a  reservation  of 
rights  against  the  mn  ty,  Bhould  appear  on  the  Face  of  the  composition 
dccd.f'  ) 

2  Coll.  Ch.  I 
(<•)  Ex  parte  Harvey,  4  De  GL,  M.  &  G.  881  :  see  Price  v.  Barker,  4  E.  &  B.  169. 


GUARANTEES,    BONDS,    ETC.,    GIVEN    TO    BANKERS.     197 

Consideration,  previous  to  1856. — Another  principal  point  to  bo 
observed,  with  regard  to  guarantees,  (not  made  under  seal  and  delivered 
as  deeds,\  is,  that  a  good  consideration  must  appear  on  the  face  of  the 
guarantee,  or  must  be  capable  of  being  discovered  from  the  words  con- 
strued, where  they  are  ambiguous, (d}  by  the  aid  of  the  circumstances  in 
which  the  guarantee  was  given,  if  given  before  July  29,  1856 ;  otherwise 
the  bankers  cannot  take  advantage  of  it. 

The  following  instances  may  serve  to  throw  light  on  this  head,  as 
regards  guarantees  given  before  the  above  date.(e) 

"We,  the  undersigned,  hereby  indemnify  the  National  Provincial 
Banking  Company,  to  the  extent  of  1,000?.,  advanced,  *or  to  be  |-*9kq-i 
advanced  to  A.  B.,  by  the  said  company;  but  the  said  indemnity  L  J 
to  cease  when  the  said  A.  B.  shall  have  paid  in  the  said  sum  of  1,000?., 
to  the  credit  of  his  account" — was  a  form  of  what  was  intended  to  be, 
the  guarantee  of  a  customer's  account. 

At  the  date  of  this  instrument,  A.  B.  had  overdrawn,  to  the  amount 
of  1,400?.  Now,  but  for  this  fact,  the  words,  "  advanced,  or  to  be  ad- 
vanced," might  have  fairly  admitted  of  the  construction,  that  future,  as 
well  as  past  advances,  were  in  the  intention  of  the  parties ;  the  docu- 
ment, however,  does  not,  on  the  face  of  it,  show  that  any  one  contem- 
plated a  security  for  future  advances,  to  the  extent  of  1,000?.;  it  binds 
the  sureties  to  pay  1,000?.,  part  of  1,400?.  already  advanced;  it  does 
not,  on  the  face  of  it,  import  that  it  is  to  attach  upon  future  advances ; 
future  advances  are  not  necessary  to  make  it  attach^  the  full  amount  of 
it  is  absorbed  in  the  debt  already  due.  The  guarantors,  probably,  did 
not  know  how  the  account  stood  at  the  time.  If  less  than  1,000?.  had 
been  due,  at  that  time,  the  guarantee  might  have  admitted  of  the  con- 
struction, that  it  impliedly  contemplated  future  advances,  inasmuch  as 
it  could  not,  otherwise,  operate  to  the  full  extent  intended ;  but  when  it 
appears  that,  at  the  time  of  giving  the  guarantee,  more  than  1,000?.  has 
been  already  advanced — an  existing  debt  to  which  the  guarantee  can  be 
at  once  applied — the  meaning  of  the  guarantee  is,  to  guarantee  the 
existing  debt  of  A.  B.,  whether  future  advances  are  made  or  not.(/) 

With  reference  to  somewhat  similar  circumstances,  the  decision  was 
diiferent,  turning,  as  questions  respecting  guarantees  are  apt  to  turn,  on 
points,  which  seem  at  first  sight,  to  involve  mere  subtleties ;  on  a  closer 
inspection,  there  will,  however,  mostly  be  discovered  substantial  varia- 
tions. 

*On  the  7th  of  August,  1838,  two  persons  signed  a  parol  r^.-n 
agreement  in  the  following  terms,  by  way  of  guarantee  to  A.  and  L 
and  B.,  bankers,  in  partnership. 

"In  consideration  of  advances  made  and  to  be  made  by  A.  and  B., 

As  to  surety's  right  to  be  indemnified  by  principal,  Close  v.  Close,  4  De  G.,  M.  k 
G.  176.  A  guarantee  may  be  so  framed  that  the  release  of  the  principal  shall  not 
be  a  release  of  the  surety.     Cowper  v.  Smith,  4  M.  &  W.  519. 

(d)  See  per  Parke,  B.,  1  Exch.  158  ;  per  Ld.  Campbell,  C.  J.,  20  L.  J.,  Q.  B.  9. 

(e)  See  19  &  20  Vict.  c.  97,  s.  3. 

(/)  Bell  v.  Welch,  9  C.  B.  154.  See  a  similar  bad  form,  Raikes  v.  Todd,  8  A. 
&  E.  846 ;  and  per  Cresswell,  J.,  2  C.  B.  638,  643 ;  and  Tindal,  C.  J.,  id.  642  ;  Maule, 
J.,  id.  643 ;  and  see  Bainbridge  v.  Wade,  16  Q.  B.  89. 


198  GKANT    ON    TIIK    LAW    OF    BANKING. 

bankers,  or  by  any  otber  persons  of  whom  their  firm  may,  from  time  to 
time  consist,  in  the  way  of  loan,  payments,  discount,  or  otherwise,  to  G. 
F.,  we  jointly  and  severally  hereby  guarantee  the  said  A.  and  B.  the 
repayment  of  the  said  advances,  and  indemnify  them  against  any  loss, 
by  reason  of  such  advances;  our  liability  not  to  exceed  the  sum  of 
1,000/.  This  guarantee  to  be  a  continuing  guarantee,  and  to  be  a  secu- 
rity to  the  said  A.  and  B.  to  the  extent  of  1,000/.,  as  aforesaid,  for  the 
whole  of  any  balance  which  may,  from  time  to  time,  or  at  any  time, 
become  due  to  the  said  A.  and  B.,  or  to  the  persons,  for  the  time  being 
constituting  the  firm  of  the  said  banking  house." 

At  the  date  of  the  guarantee,  G.  F.,  who  was  an  old  customer  of  the 
bank,  owed  them  a  balance  of  1,685/.  10s.  10</. ;  after  that  date,  various 
other  sums  were  advanced  to  him. 

Held,  that  the  guarantee  disclosed  a  sufficient  consideration  to  pay 
past,  as  well  as  future  advances ;  some  advances  having,  in  fact,  been 
made  subsequent  to  the  date  of  the  guarantee,  and  the  circumstance  of 
the  bankers  not  binding  themselves,  by  the  terms  of  the  instrument,  to 
make  advances,  being  of  no  consequence,  since  the  advances  actually 
were  made  in  pursuance  of  the  instrument,  (g) 

This  decision  took  place,  it  is  material  to  observe,  before  19  &  20  Vict, 
c.  97,  s.  3,  was  passed. 

The  following  was  the  form  of  the  guarantee,  in  another  case,  which 
also  occurred  before  the  alteration  of  the  law  by  19  &  20  Vict.  c.  97, 
s.  3. 

r*oc'i  "We  hereby  become  bound  to  guarantee  to  you,  as  *cashier, 
L  -I  &c,  and  as  acting  for  behoof  of  the  Aberdeen  Banking  Com- 
pany, all  current  obligations  and  engagements  in  your  hands,  to  which 
J.  S.  may  be  a  party,  and  also  all  his  future  obligations  and  engage- 
ments that  may  come  into  your  hands,  as  cashier  aforesaid,  or  into  the 
hands  of  your  successors  in  office,  in  the  course  of  business.  This  gua- 
rantee, however,  to  be  limited  to  the  sum  of  1,000/. ;  such  to  be  a  stand- 
ing guarantee,  and  in  force,  until  recalled  by  us." 

This  was  sent,  in  form  of  a  letter,  addressed  to  the  cashier  of  the 
Aberdeen  Banking  Company,  and  signed  by  a  trading  firm. 

On  the  faith  of  this  instrument,  the  bank  discounted,  for  J.  S.,  several 
bills  of  exchange,  to  the  amount  of  998/.  10s.  bd.,  all  which  bills  were 
dishonoured,  and  no  part  of  the  amount  paid  to  the  bank,  with  the  ex- 
ception of  50/.  j  so,  on  the  whole,  the  balance  on  this  account,  against 
J.  S.,  was  948/.  10s.  bd. 

J.  S.  had  a  banking  account,  with  the  bank,  wholly  distinct  from  the 
former  account,  which  was  confined  to  discount  transactions;  and  at  the 
time  when  a  fiat  of  bankruptcy  issued  against  the  guarantors'  firm,  the 
banking  account  showed  a  balance  of  106/.  in  favour  of  J.  S. 

The  bank  was  held  entitled  to  prove,  for  the  difference  between  the 


,i   Chapman  v.  .Sutton,  2  C.  B.  634.     "In  consideration  of  giving  credit,"  held 
ufficiently  to  nhowpast  as  well  as  futi 
0.  B.  437.     Consideration  by  nccessa 
M0  ;  (ilyn  v.  Hertcl,  2  J.  B.  Moo.  134. 


\'J  I      *^lltt|Mli«Hl     V.    UUUWIlj     4     \J.     11.     \J<t1.  All     '    I  '  I 1      I  '  1  '    1  .1  1  I  i  HI     Ul    ^IVllJ^    I    II    Ult, 

sufficiently  to  nhowpast  as  well  as  future  credit  to  be  meant.     Kdwards  v.  Jevons, 
8  C.  B.  437.     Consideration  by  necessary  implication,  Caballero  v.  Slater,  14  C.  B. 


GUARANTEES,  BONDS,  ETC.,  GIVEN  TO  BANKERS.  199 

two  accounts,  it  being  considered  that  the  mention  of  the  future  obliga- 
tions and  engagements  implied  a  consideration,  (/t) 

The  above  is  the  law,  with  respect  to  guarantees  given  previously  to 
29th  July,  1856 ;  such  guarantees,  unless  made  under  seal,  and  also  de- 
livered as  deeds,  must  contain  the  consideration  expressed  on  the  face  of 
them,  &c,  as  above  laid  down,  in  order  to  be  valid  and  effectual,  wben 
proceedings  are  to  be  taken  on  them. 

With  respect  to  instruments,  of  this  kind,  made  since  that  r^orp-i 
*date,  the  law  has  been  altered ;  and  it  now  is  not  necessary  that  *-  J 
any  statement  of  the  consideration  should  appear  in  such  undertakings 
by  simple  contract,  any  more  than  in  deeds,  provided  such  undertakings 
be  » in  writing,  and  signed  by  the  party  to  be  charged  therewith,  or 
some  other  person  by  him  thereunto  lawfully  authorized. "(i) 

Promissory  Note  as  Guarantee. — A  guarantee  is  sometimes  given,  in 
the  form  of  a  promissory  note,  signed  by  the  guarantor;  but  in  such  case 
the  instrument  will  often  be  found  to  operate  as  an  agreement,  and  must 
consequently  be  stamped  accordingly,  in  order  to  be  made  effectual. 

Thus,  if  two  persons,  as  guarantors  or  sureties  for  a  customer  of  a 
bank,  sign,  along  with  the  customer,  an  instrument  in  such  form  as  the 
following : — 

"  We  jointly  and  severally  promise  to  pay  the  sum  of  100?.  to  the 
Lincoln  and  Lindsay  Banking  Company,  or  their  order,  on  demand, 
with  interest." 

And  on  the  back  of  the  document  there  is  this  indorsement,  signed  by 
the  same  parties  : — 

"  The  within  note  is  given  for  securing  floating  advances,  from  the 
said  hanking  company,  to  the  customer,  with  interest,  from  the  respective 
times  when  such  advances  have  been  or  may  be  made,  together  with  com- 
mission, stamps,  postages,  &c,  and  all  usual  charges  and  disbursements, 
not  exceeding  in  the  whole,  at  any  one  time,  the  sum  of  1001." 

Then,  in  an  action  by  the  bank,  against  one  of  the  two  sureties  on  the 
note,  to  which  there  was  a  plea  of  the  Statute  of  Limitations ;  and  pay- 
ments were  shown  to  have  been  made,  by  the  customer,  in  reduction  of 
the  balance  due  on  the  banking  account,  within  six  years,  before  action. 
Held,  that  in  order  to  point  the  payments  to  the  note,  it  was  essential  to 
the  plaintiff's  case,  to  take  notice  of  the  indorsement,  in  order  to  show 
the  note  to  be  a  security  for  the  floating  balance ;  for  which  purpose  it 
was  an  agreement,  and  being  *above  the  value  of  201.,  required  r*257~| 
an  agreement  stamp,  to  be  admissible  in  evidence.  (/)  Not  having  L 
such  stamp,  it  could  not  be  taken  advantage  of. 

It  will  be  seen  that  the  bankers,  in  this  case,  were  ill-advised  in  two 
respects. 

(h)  Ex  parte  Littlejohn,  3  M.  D.  &  De  G.  182  ;  see  S.  0.,  as  to  stamp  ;  see  form,  3 
M.  D.  &  De  G.  490;  and  another  form  and  observations  of  judges,  5  C.  B.  810, 
816. 

(i)   19  &  20  Vict.  c.  97,  s.  3. 

(/)  Cholmeley  v.  Darley,  14  M.  &  W.  344  ;  see  per  Coleridge,  J.,  22  L.  J.  (N.  b.) 
Q.  B  267.  What  not  a  promissory  note  but  a  guarantee,  see  cases,  1  M.  &  W. 
410;  2  M.  &  Gra.  644;  and  see  10  A.  &  E.  98 ;  11  id.  213;  4  Bing.  N.  C.423;  5 
Bing.  N.  C.  156. 


200         GRANT  ON  THE  LAW  OF  BANKING. 

1.  They  ought  to  have  insisted  thai  the  document  should  be  stamped, 
when  given. 

'2.  They  ought  to  have  brought  the  action  sooner;  it,  in  fact,  having 
been  brought  about  eight  years  after  the  cause  of  action  might  have 
arisen. 

If  the  security  or  guarantee  taken  be  in  the  form  of  a  joint  and  seve- 
ral promissory  note,  payable  to  the  bankers  on  demand,  and  signed  by 
the  customer,  and  the  guarantor,  for  a  given  sum;  then,  when  the  guar- 
antor is  sued,  on  this  note,  for  the  sum  mentioned  in  it,  to  allege  that 
the  defendant  made  the  note  as  the  surety,  and  for  the  accommodation 
of  the  customer,  with  the  knowledge  of  the  bankers,  and  thai  after  the 
note  became  due,  and  payment  had  been  demanded  of  the  customer,  the 
bankers  being  holders,  without  the  consent  or  leave  of  the  defendant, 
agreed  to  give  time  to  the  customer,  is  wholly  ineffectual  as  an  answer 
to  the  action,  there  being  no  specific  agreement,  on  the  part  of  the 
bankers,  to  take  the  note,  from  the  defendant,  as  a  surety  only;  and  it 
was  left  a  doubt  whether,  if  there  had  been,  at  the  time  of  the  making 
of  the  note,  such  a  specific  agreement  entered  into,  the  surety  would  have 
been  discharged,  by  time  given  to  the  customer.(&) 

Probably  it  is  not  unusual,  and  it  is  prudent,  for  bankers,  on  taking  a 
r*9Ri<ri  n0*e  °^  ^'s  kind,  to  point  out  to  the  surety  that,  *though  he 
L  J  signs  only  as  surety,  he  will  be  treated,  in  all  respects,  as  a  prin- 
cipal, if  need  be ;  and  in  no  case,  ought  they  to  receive  such  a  note,  or 
agree  to  receive  it  from  him  as  surety  lest  it  should  be  held  that  in  such 
case  he  was  discharged,  by  reason  of  time  being  given  to  the  customer. 

There  is  another  consideration  relative  to  a  joint  and  several  promis- 
sory note,  of  this  nature,  given  for  the  above  object. 

In  cases  of  banking  copartnerships,  A:c.,  such  notes  are  not  unusually 
made  payable  to  trustees,  of  the  banking  company,  or  their  order,  on  de- 
mand. 

But  in  case  of  an  indorsement  of  the  above  kind,  that  is  to  say  if  the 
note  bears  a  memorandum  to  the  above  effect,  the  question  arises,  what, 
if  the  note  be  indorsed  over,  by  the  payees,  will  the  indorsee  be  able  to 
recover?  The  answer  must  be,  that  it  is  quite  uncertain,  and  must  de- 
pend upon  the  state  of  the  account,  at  the  date  of  the  indorsement.  This 
Bhows  thai  such  an  instrument  could  hardly  be  regarded  as  negotiable. 
In  fact,  with  such  indorsement,  even  if  properly  stamped,  the  document 
is  imt  a  promissory  note,  and  cannot  be  declared  on  1>\  the  payees,  as 
snch,  but  inii-t  be  treated  as  an  agreement.  The  payees  would  be  non- 
snited,  if  they  declared  upon  it,  as  a  promissory  note.(Z) 

It  is  not  uncommon  for  joint  stock  banks  to  take  a  joini  and  Beveral 
promissory  oote,  Bigned  by  the  customer  and  other  parties,  the  latter  of 
whom  are  intended  to  be  sureties  for  the  former,  in  order  to  secure  anj 
balance,  that   may  become  due,  to  the   bank,  on   his   account  with  them, 

or  to  secure  advances  made  by  them  to  him. 

(k)  Manley  y.  Boycott,  2  E.  &  B.  16.  Bee  case  of  a  joint  security,  Other  v.  Ive- 
son,  3  Drew.  177.  A  promissory  note  containing,  in  body  of  it,  a  memorandum  of 
deposit  of  title-deeds,  as  collateral  security,  will  require  a  mortgage  -tamp.    Wise 

v.  Charlton,  i  A.  &  E.  786  ;  see  Robins  r.  Slay,  1 1  A.  <<c  E.  213;  Fan irt  v.  Th 

9  Q.  B  (0  1 1  M.  ft  W.  317  :  Bee  per  Coleridge,  J.,  22  L.  J.,  Q.  B.  267. 


GUARANTEES,    BONDS,    ETC.,    GIVEN    TO    BANKERS.     201 

Now,  in  the  first  place,  it  is  very  material  that  the  persons  having  the 
management  of  the  business,  or  of  the  accounts  of  the  bank,  should  be 
satisfied  that  there  is  nothing,  in  their  deed  of  settlement,  to  prohibit  any 
arrangement  of  this  nature.  Many  deeds  of  settlement  contain  stringent 
provisions,  to  prevent  the  funds  of  the  company  being  advanced,  r*2591 
or  *risked  upon  merely  personal  security.  In  such  case,  if  the  L 
promissory  note  turned  out  to  be  unproductive,  the  directors  would  pro- 
bably, indeed,  almost  certainly,  be  held  liable  to  make  good  the  amount 
lost. 

Secondly,  in  case  the  promissory  note  should  be  indorsed  with  a 
memorandum,  to  the  effect  that  the  within  note  is  given,  for  securing 
floating  balances,  of  the  customer,  not  exceeding,  &c,  in  whole  the  amount 
of  the  note,  it  is  often  material,  in  order  to  defeat  a  plea  of  the  Statute 
of  Limitations,  (as  by  showing  that  payments,  that  have  been  made  by 
the  customer  in  the  interval,  had  reference  to  the  promissory  note,)  that 
the  indorsed  memorandum  should  bear  an  agreement  stamp ;  indeed,  no 
such  note  ought  to  be  taken,  with  such  indorsement,  if  the  amount  of 
the  note  is  above  20/.,  except  the  indorsement  bears  the  proper  stamp. (m) 
To  secure  an  advance  of  1,000?.,  from  a  banking  copartnership,  made 
to  a  person  who  was  not,  at  the  time,  a  customer  of  that  concern,  but 
who  wanted  the  money  for  the  purpose  of  paying  off  a  debt,  owing  to 
another  banking  copartnership,  of  which  he  had  been  a  customer,  the 
banking  company,  first  mentioned,  agreed  to  advance,  upon  several  other 
persons  joining  him  in  a  bond,  which  was  entered  into  accordingly,  and 
the  money  advanced ;  and  the  borrower  opened  an  account  and  became 
a  customer  of  the  banking  company. 

It  cannot  be  held,  in  such  case,  to  be  invariably  the  rule  that  all  pay- 
ments made  subsequently  to  giving  the  bond,  by  the  borrower,  to  the 
bank,  is  to  be  applied  in  immediate  and  final  liquidation  of  the  1,000?., 
or  that  if  the  borrower,  after  the  giving  of  the  bond,  on  a  long  course  of 
transactions,  be,  for  a  time,  in  advance  to  the  bank,  the  bond  is  thereby 
satisfied. 

It  may  be,  in  default  of  express  stipulation,  to  be  inferred,  from  the 
conduct  and  language   of  the  parties,   after  the   execution  *of  r*260"l 
the  bond,  that  the  intention  was  for  the  bond  to  stand  as  a  con-  L 
tinuing  security,  in  which  case  the  rule  of  application  of  payments  would 
not  apply. (») 

The  bond  was  considered  to  have  been  given,  to  secure  the  banking 
company,  from  advances  which  they  might  make,  from  time  to  time, 
and  consequently  had  not  been  discharged. 

In  truth,  such  a  bond  ought  never  to  leave  it  a  question,  on  the  terms 
of  it,  with  what  intention  it  was  given.  Trustees,  or  others  interested 
for  banking  copartnerships,  ought,  therefore,  to  be  careful  in  ascertaining 
that  the  bond  has  words  expressing  the  meaning  of  the  parties,  both  by 
positive  and  negative  clauses.  _  # 

A.,  being  a  customer  of  a  bank,  prevails  upon  B.  to  join  him  in  a 

(to)  Cholmeley  v.  Darley,  14  M.  &  W.  344. 
(»)  Henniker  v.  Wigg,  4  Q.  B.  792. 


202         GRANT  OX  THE  LAW  OF  BANKING. 

promissory  note  for  15C7.  to  secure  his  balance;  this  he  sends  to  the 
bank,  with  a  letter,  stating  that  he  had  p>t  B.  to  join,  with  him,  in  the 
note.  The  note  is  never  entered,  in  the  booksof  the  bank,  to  A.'s  debit 
When  it  became  due,  there  was  a  balance  against  A.,  but,  within  a  few 
days  afterwards,  there  was  a  balance  of  250/.  in  his  favour.  On  these 
facts,  it  ma  contended,  in  an  action  against  13.,  by  the  bank,  that  the 
note  must  be  taken  to  have  been  paid,  or  that,  as  B.  had  signed  only  as 
surety,  and  without  consideration  for  making  the  note,  and  as  the  bank 
had  accepted  the  note  on  that  understanding  and  knowledge,  and  had 
given  time  to  A.,  the  principal,  without  B.'s  knowledge,  therefore  B. 
was  discharged. 

But  it  was  held,  that  the  facts  did  not  support  either  of  these  defences, 
for  that  where  two  persons  give  a  joint  and  several  promissory  note,  for 
the  debt  of  one,  it  is  necessary,  in  order  to  give  the  other  the  rights  of 
a  surety,  as  against  the  creditor,  to  show  that  he  was  only  a  surety,  that 
the  creditor  knew  it,  and  accepted  him  as  such  ;  and  that  mere  inactivity, 
forbearance  or  lying  by,  does  not  amount  to  giving  time,  and  that  rcfrain- 
r*-?m  *n»  fr°m  appropriating  the  balance  of  *A.'s  account,  in  payment 
L         J  of  the  note,  did  not  discharge  B.  from  his  liability. (o) 

The  note  was  never  entered  to  the  debit  of  A.,  and  the  bankers  were 
not  bound  to  pay  it ;  although  if  the  payment  had  been  made,  to  the 
principal,  it  would  have  availed  for  the  benefit  of  the  surety,  and  it  has 
been  said  that  it  would  entirely  alter  the  position  of  bankers,  if  it  were 
to  be  considered  that  because,  after  they  take  a  joint  and  several  promis- 
sory note,  they  have  a  balance,  in  their  hands,  belonging  to  one  of  the 
parties  to  the  note,  the  other  should  be  discharged,  if  he  turned  out  to 
be  a  surety.(o) 

A  joint  and  several  promissory  note  is  made  to  a  banker,  by  a  customer 
and  his  surety,  to  secure  advances,  made  by  the  banker.  The  customer 
afterwards  pays  into  the  bank  generally  sums,  exceeding  the  amount  of 
the  advances,  but  also  draws  out  to  a  still  larger  amount,  and  becomes 
bankrupt.  In  such  case  the  surety  is  liable,  for  he  cannot  insist  that 
the  payments  should  be  appropriated,  in  discharge  of  the  sum  secured 
by  the  note.(p) 

A.  and  B.,  being  partners,  got  permission,  from  their  bankers,  to 
overdraw  their  account,  on  B.  giving,  to  the  bankers,  his  promissory  note 
for  2,000/.  as  a  security,  A.  giving  to  B.  his  (A.'s)  promissory  note  for 
1,000/.,  being  half  the  liability  incurred.  B.  indorses  this  note,  and 
pays  it  into  his  account  with  the  bankers,  who  were,  in  fact,  ignorant  of 
the  circumstances  under  which  he  took  the  note.  When  the  account 
was  overdrawn  by  1,3002.,  and  after  the  termination  of  the  partnership 
of  A.  and  B.,  the  bankers  sued  A.  on  the  promissory  note  for  1,000/., 
and  it  was  held  that  they  were  entitled  to  do  so;  for,  although  the  effect 
would  be,  in  the  first  instance,  to  cause  A.  to  pay,  to  them,  more  than 
one  moiety  of  the  1,300/.,  yet,  it  was  observed,  that  he  might  call  upon 

(o)  Strong  v.  Foster,  25  L.  J.,  C.  B.  100,  110. 

Ex  parte  Whitwortli.  2  M.  D.  ft  Dfl  <J.  164;  see  Strong  v.  Foster,  25  L.  J., 
Cli..  106. 


GUARANTEES,    BONDS,    ETC.,    GIVEN    TO    BANKERS.     203 

]}.  to  pay  back  his  proportion.  It  would  have  been  the  same,  „,„„« 
*in  all  respects,  apparently,  if  the  bank  had  known  of  the  cir-  L  J 
cumstances,  in  which  the  promissory  note  was  given,  to  B.(y) 

Joint  and  several  Covenant. — If  a  joint  and  several  covenant  is 
entered  into,  by  a  principal  and  his  surety,  that  the  principal  shall  repay 
a  sum  advanced,  by  three  instalments,  with  interest,  on  three  specified 
days,  and  one  instalment  is  duly  paid,  but  before  the  second  is  paid,  the 
surety  becomes  bankrupt;  the  creditor  may  prove,  against  the  bankrupt's 
estate,  in  respect  of  the  amount  of  the  two  unpaid  instalments,  and 
interest,  as  upon  a  contingent  liability,  under  12  &  13  Vict.  c.  106, 
s.  178.(V) 

It  will  be  observed,  that  here  there  is  a  measure  of  the  liability ;  it 
cannot  exceed  a  certain  sum ;  and  this  decision,  being  upon  appeal  to 
the  lords  justices,  must  rule  all  future  cases,  in  which  the  liability  can 
be  ascertained,  and  which  are  not  cases  of  merely  unliquidated  damages. 

Good  Conduct  of  Clerks. — With  respect  to  guarantees  for  the  good 
conduct  of  clerks,  of  bankers,  a  point  which  has  already  been  adverted 
to,  namely,  whether  the  guarantee,  that  is  taken,  is  in  such  a  shape  as 
to  stand  good,  in  case  of  a  change,  in  the  members  of  the  banking  house, 
arises  more  frequently  in  cases  of  guarantees  for  the  fidelity  of  clerks, 
&c,  than  in  those  of  guarantees  for  the  repayment  of  advances  to 
customers,  and  therefore  requires  to  be  more  fully  developed. 

In  considering  this  subject,  the  courts  are  chiefly  guided,  by  the 
intention  of  the  parties.  This  is  mostly  discoverable  only  from  the 
expressions,  they  have  used,  in  the  instrument  of  guarantee.  In  other 
words,  it  is  most  important,  for  the  security  of  bankers,  that  the  words 
used  shall  clearly  and  *undeniably  demonstrate  the  intention,  ^  „„-. 
that  the  guarantor,  whether  he  undertakes,  for  the  good  conduct  L  J 
of  the  clerk,  during  a  limited  or  undefined  period  of  time,  should  be 
bound  to  the  hanking  house,  not  to  the  persons  who  may  be  members  of 
the  establishment,  at  the  date  of  the  guarantee ;  because,  in  case  the 
guarantor  is  only  bound,  in  the  latter  way,  upon  any  change  in  the  part- 
nership, by  death,  by  retirement,  or  by  taking  in  fresh  partners,  the  new 
partnership  might  find  themselves  unable  to  enforce  the  obligation. 

The  following  is  an  illustration  of  what  has  just  been  said,  as  to  the 
effect  of  change  of  partnership. 

A  guarantor  executes  a  bond,  whereby  he  undertakes,  to  A.,  for  the 
fidelity  of  a  clerk,  so  long  as  he  should  continue  in  A.'s  service  as  clerk. 
A.  takes  a  partner,  and  brings  an  action  on  the  bond,  and  assigns,  as  a 
breach,  that  the  clerk  had  received  money,  on  account  of  the  partnership, 
and  had  not  paid  it  over,  to  the  partners,  but  A.  was  not  permitted  to 
recover,  the  court  saying  that  when  A.  took  a  partner,  there  was  an  end 
of  the  obligation ;  that  the  condition  was  confined  to  A.  alone,  and  the 
breach  assigned  was  not  within  the  condition,  and  there  was  nothing  to 
show,  the  guarantor  to  have  intended,  to  be  bound,  for  the  clerk's  fidelity 
to  any  other  person  than  A.(.s) 

(q)  Heywood  v.  Watson,  4  Bing.  496. 

(r)  Ex  parte  Barwis,  25  L.  J.,  Bank.  Cas.  10 ;  Ex  parte  Willis,  4  Exch.  530. 

(*)  Wright  v.  Russell,  3  Wils.  530 ;  S.  C,  2  W.  Bla.  934,  see  sup.  pp.  221,  222. 


204         GRANT  ON  THE  LAW  OF  BANKING. 

This  decision,  it  is  true,  has  been  questioned  by  some  judges,^)  but 
the  principles  on  which  it  is  founded  do  Dot  appear,  cither  expressly  or 
r*or_n  *mpliedly,  t0  have  been  decided  *to  be  inapplicable  to  cases, 
L  J  where  the  facts  were  tantamount,  and  the  terms  of  the  guarantee 
equivalent.  («) 

In  connection  with  this  class  of  cases,  may  be  here  mentioned  one 
which,  though  it  can,  in  general,  only  be  applicable,  in  instances  where, 
a  banking  house  is  conducted,  by  a  single  person,  without  partners. 

If  a  bond  be  taken  that  a  clerk  shall  serve  faithfully,  and  account  for 
all  money,  bills,  notes,  &C.  which  he  shall  receive,  &c.  to  the  banker, 
and  his  executors,  administrators  and  assigns,  it  does  not  make  the  surety 
liable  for  money,  &c.  received  by  the  clerk  in  the  service  of  the  execu- 
tors, &c.  who  continue  the  business,  and  retain  him,  in  the  same  employ- 
ment.^:) This  case  turned  upon  the  intention,  which  was  held  to  be,  to 
guarantee  the  service  to  the  testator,  and  no  longer,  and  must  be  con- 
sidered with  reference,  to  the  statutory  enactment  (passed  since  its  date,) 
mentioned  above. (^) 

In  a  case,  where  a  bond  was  given,  to  guarantee  to  a  company,  not 
incorporated,  the  faithful  services  of  a  clerk,  and  the  bond  was  made  to 
and  with  trustees  on  behalf  of  the  body,  the  court  held,  construing  the 
instrument  with  regard  to  the  obvious  intention  of  the  parties,  that  it 
might  be  sued  upon  by  the  trustees,  at  any  time,  during  the  continuance, 
in  the  service  of  the  actual  body  of  persons,  carrying  on  the  same  busi- 
ness, under  the  same  name,  notwithstanding  any  intermediate  change  of 
the  original  holders  of  the  shares,  either  by  death  or  transfer.(z) 
r*9r„  So  where  a  joint  stock  banking  company  had  been  established, 
L  J  *uuder  stat.  7  Geo.  IV.  c.  4G,  and  a  guarantee  was  given  it, 
and  then,  upon  a  considerable  accession  of  proprietors  and  capital,  and 
an  increase  in  the  number  of  directors,  the  company  took  another  name, 
it  not  being  shown  to  differ,  in  its  constitution,  from  the  former  bank, 
the  bank  remaining  the  same,  though  with  a  different  name  :  it  was  held, 
that  its  public  officer  might  sue  and  recover  upon  the  guarantee  given 
to  the  former  establishment. (") 

Another  point  to  be  considered  is,  that  a  guarantee,  for  the  faithful 
services  of  a  clerk,  given  at  a  time  when  his  employment  comprises  a 
certain  routine  of  duties,  will  not  extend  to  cover  other,  or  additional, 

(l)  Ex.  gra.  in  Barclay  v.  Lucas,  3  Doogl.  32;  S.  0.,  1  T.  B.  291,  n. ;   see  1 
b.  292  j  bul  Barclay  v.  Lucas  baa  nol  escaped  without  much  question 
the  note  al  the  end  of  the  report  in  3  Dougl.  321.     Howi    <  i    Chapman  v.  Beck- 
3  Q.  II.  722,  recognizes  the  principle  of  it.  and  the  Bame  seems  to  be  the 
ground  of  decision  in  Metcalfe  v.  Bruin,  12  Bast,  400;  Wilson  v.  Graven,  8  M.&  W. 
.\/,.,  thai  the  bank  was  the  Bame  all  along.     So  in  other  cases,  London,  &c., 
Railway  Company  v.  Goodwin,  3  Exch.  331;  Eastern,  ice,  Railway  Company  v. 
ne,  23  L.  J.,  Bxch.  61. 
<u)  Bee  Dry  \.  Davey,  L0  A.  &  B.  30. 

(x)  Barker  v.  Parker,  l  T.  I:.  287:  '"it  compare  per  Lord  Ellenborough,  C.  J., 
E    t.  490;  Lord  Mansfield,  0.  J.,  1  T.  K.  295,  distinguishes  Bar- 
clay \.  Lucas,  by  observing  thai  there  the  Bame  trade  was  carried  on,  by  the 
original  masters,  in  the  same  manner,  ami  the  only  difference  was.  the  introduc- 
tion of  a  new  partner.  3ee  Bupra,  J>.  222. 
(z)   Metcalfe  V.  Bruin,  12  East,  400;  see  0  J.  B.  Moo.  109,  110;  see  supra,  p.  222. 
(a)  Wilson  v.  Craven,  8  M.  &  W.  584. 


GUARANTEES,  BONDS,  ETC.,  GIVEN  TO  BANKERS.  205 

duties  that  may  be  imposed  on,  or  accepted  by,  him;  thus,  if  a  clerk  to 
a  bank,  for  whose  good  conduct,  as  clerk,  a  guarantee  has  been  given,  is 
made  manager,  and  it  be  shown,  conclusively,  that  he  ceased  to  be  clerk 
when  he  became  manager,  so  that  no  breach  of  the  bond  could  have 
happened  after  he  became  manager,  that  will  be  an  answer  to  an  action, 
by  the  bankers,  on  the  bond,  against  the  surety,  founded  on  misconduct 
as  manager  ;(b}  at  least,  this  would,  in  all  probability,  be  ruled  in  any 
case  where  the  guarantee  did  not  expressly  engage  for  his  performance 
of  his  duties  as  clerk,  or  in  any  other  capacity. (b\ 

It  is  scarcely  necessary  to  observe  that  the  conduct,  which  amounts  to 
a  default,  on  the  part  of  the  clerk,  and  which  renders  the^surety  liable, 
upon  his  undertaking,  must  be  some  act  or  omission,  some  malfeasance 
or  nonfeasance,  within  the  scope  of  the  duties  appertaining  to  the  situa- 
tion he  fills. 

A  clerk  of  a  provincial  bank  (in  Devonshire,)  who  was  sent  by  the 
manager,  at  the  request  of  a  customer,  to  his  residence,  about  eleven 
miles  from  the  bank,  in  order  to  receive  a  large  sum  of  money,  to  be 
placed  to  the  customer's  account  with  the  bank,  and  who,  casually,  on 
his  way  back,  lost  the  money  out  of  his  pocket,  was  held  to  have  received 
*the  money,  in  the  course  of  his  employment,  as  clerk,  and,  i-^pp-i 
although  the  jury  found  it  not  to  be  the  custom  of  bankers,  in  L  J 
that  part  of  the  country,  to  send  for  their  customers'  money,  as  aboVe 
stated,  a  surety,  who  had  guaranteed  the  bank  that  the  clerk  "  should 
well  and  faithfully  serve  them,  as  a  clerk,  and  should  not  cancel,  obli- 
terate, spoil,  destroy,  waste,  embezzle,  spend,  or  make  away  with,  any  of 
the  books,  papers,  writings,  stamps,  cash,  bills  of  exchange,  promissory 
notes,  or  other  property  of  the  bank,  or  of  any  of  the  customers,  &c, 
which  should  be  deposited  in  his  hands,  or  intrusted  to  his  custody  or 
possession,  or  come  to  his  care,  custody  or  possession,"  was  held  to  be 
responsible  to  the  extent  of  the  moneys  lost.(c) 

The  same  would  be  the  decision  in  case  of  the  payment  of  a  cheque, 
or  the  receipt  of  money,  after  banking  hours,  or  of  sending  the  clerk  to 
London,  on  a  sudden  emergency,  to  obtain  funds,  or  the  like.(d) 

The  fact  of  a  clerk  having  received  into  his  personal  possession  a  sum 
of  money,  and  having  lost  it,  is  strong  evidence  of  negligence ;  but  it 
would  have  been  an  answer  to  the  action  above  referred  to,  to  have  shown 
that  the  loss  had  been  occasioned  by  robbery,  before  the  clerk  could  have 
got  back  to  the  bank,  and  without  his  default,  (e) 

Evidence. — In  cases  of  guarantees,  or  securities  of  any  kind,  taken 
for  the  good  behaviour  of  clerks,  it  is  material  to  bear  in  mind  that 
whatever  is  evidence  available  against  the  principal,  is  available  against 
the  surety. 

Thus,  where  bankers  sued  the  obligor  of  a  bond,  given  for  the  fidelity 

(b)  Anderson  v.  Thornton,  3  Q.  B.  271,  where  see  the  terms  of  the  engagement ; 
and  see  supra,  p.  222. 

(c)  Melville  v.  Doidge,  6  C.  B.  450 ;  S.  C,  it  was  found  to  be  the  custom,  for 
London  bankers,  to  send  about,  in  all  directions,  for  their  customers'  money. 

(d)  See  6  C.  B.  454. 

(e)  See  Walker  v.  British  Insurance  Society,  21  L.  J.  (N.  S.)  Q.  B.  257. 


206         GRANT  ON  THE  LAW  OF  BANK  INC. 

df  a  clerk,  &o.,  entries  of  receipts  of  money,  by  the  clerk,  in  the  books, 
r*->fj--i  kept  by  him,  in  discharge  of  his  duty  *as  clerk  to  them,  were 
L  ~  J  held  to  be,  after  his  death,  evidence,  against  the  surety,  of  the 
fact  of  his  having  received  the  moneys  therein  mentioned,(/)  it  being 
part  of  his  guaranteed  duty  to  keep  those  books. 

The  reason  for  taking  such  security,  is  not  only  the  obvious  one,  that 
in  case  of  any  embezzlement  by  the  clerk,  the  banker  may  have  the 
means  of  protecting  himself  against  tin-  loss  thereby  caused,  but  also 
that  he  may  have  the  same  protection,  in  case  of  any  loss  arising  from 
the  merely  careless  or  thoughtless  inattention  to  his  duty,  of  the  clerk, 
in  which  case,  without  such  security,  the  loss  must  ultimately  fall  on  the 
banker,  assuming  the  clerk  to  be  unable  to  make  it  good.(y) 

But  where  a  fraudulent  scheme  has  been  concocted,  between  a  cus- 
tomer of  the  bankers  and  their  servant,  the  object  of  which  is  to  impose 
upon  them,  and,  in  pursuance  of  this  scheme,  a  cheque  has  been  drawn 
by  A.,  payable  to  the  customer,  or  bearer,  and  by  the  customer  indorsed 
to  the  bankers,  and  by  their  servant  carried  to  the  customer's  credit,  in 
order  to  cause  the  bankers  to  think  that  that  account  was  not  overdrawn 
on  a  given  day,  with  the  understanding  that,  after  that  day  the  cheque 
should  be  returned  to  the  customer ;  there  no  loss  shall  be  suffered  by 
the  bankers,  but  they  may  sue  the  maker  of  the  cheque  upon  it,  though 
he  was  not  shown  to  have  been  acquainted  with  this  arrangement,  the 
bankers  themselves  being  no  way  privy  to  it.(/t) 

Embezzlement. — In  a  case  where  a  clerk  to  a  bank  misappropriated 
funds  that  came  to  his  hands,  as  clerk,  and  died  before  the  fraud  was 
discovered,  without  a  will,  leaving  considerable  personalty,  which  was 
placed  by  his  widow  in  the  custody  of  the  bankers,  and  she  took  out  let- 
ters of  administration,  and  commenced  proceedings  against  them  to 
r*'>681  rccovcr  *tne  property,  it  was  held  to  be  no  answer  to  a  bill  filed 
L  -I  by  them  for  an  injunction  and  administration  of  the  estate,  to 
say  that  the  bill  alleging  a  felony,  no  civil  remedy  lay  in  respect 
thereof.  (A 

If  a  clerk  commits  an  embezzlement  on  the  bank,  and  his  father,  in 
order  to  cover  his  defalcations,  transfers  stock  into  the  name  of  the 
banker,  this  is  a  composition  of  a  felony  to  prevent  a  prosecution,  and 
it  seems  that  the  value  of  the  stock  cannot  be  recovered,  nor  will  the 
stock  be  ordered  to  be  transferred.  (/•) 

A  clerk  of  a  banking  copartnership,  under  7  Geo.  IV.  c.  4G,  may  be 
convicted  of  embezzling  the  moneys  of  the  company,  though  he  is  a 
shareholder  or  partner  in  such  company. (/) 

A  well-known  principle  of  the  common  law  frequently  governs  cases 
of  misconduct,  as  regards  the  mode  of  proceeding  criminally  against 
bankers' clerks,  and  may  properly  be  stated  here.  It  is  this: — When 
goods,  which  a  master  has  never  been  in  possession  of,  are  delivered  by 

(/)  Whitnash  v.  George,  8  B.  &  C.  558 

Iff)  Rogers  v.  Kelly,  2  Campb,  123. 

(A)  Bosanqael  r.  Corsqr,  8  M.  .v  \v.  142. 

(t)  Wickham  v.  GatrilL,  2  Sma.  k  G.  353.       (k)  Claridge  v.  Iloare,  14  Ves.  59. 

(0   Reg.  v.  Atkinson,  Car.  &  M.  525. 


GUARANTEES,    BONDS,    ETC.,    GIVEN    TO    BANKERS.     207 

a  third  person  to  a  servant,  for  the  master's  use,  and  the  servant,  instead 
of  delivering  them  to  his  master,  by  depositing  them  in  his  house,  or  the 
like,  converts  them  to  his  own  use,  this,  at  common  law,  is  no  larceny ;(m) 
thus,  if  a  banker's  clerk  receive  money  at  the  counter,  and,  instead  of 
putting  it  into  the  proper  drawer,  &c,  purloin  it,  he  is  not  guilty  of  lar- 
ceny^?*) or,  if  he  receive  a  bond  for  the  purpose  of  being  deposited  in 
the  bank,  and  instead  of  so  doing,  take  possession  of  it  for  his  own  pur- 
poses, he  is  not  guilty  of  larceny. (o)  So,  where  a  servant  was  sent  to 
get  change  for  a  bank  note,  which  he  got,  but  absconded  with  the 
change,  it  was  holden  no  larceny,  (p) 

*But,  where  a  clerk  and  cashier  of  a  bank  made  false  entries 
in  the  books,  to  the  credit  of  a  customer,  then  obtained  the  cus-  L  "  J 
tomer's  cheque  for  the  sum  thus  falsely  placed  to  his  credit,  and  paid  the 
amount  of  the  cheque  to  himself,  by  bank  notes,  this  was  considered  by 
the  judges  to  be  a  larceny  of  the  notes;  for  they  were  originally  in  the 
possession  of  the  master.  (§)  So  it  is  larceny,  if  a  cheque,  drawn  by  the 
master  on  his  banker,  be  delivered  by  him  to  his  servant,  to  carry  to 
another  person,  or  to  buy  goods  with,  and  the  servant  apply  it  to  his 
own  use;  this  is  larceny  of  the  cheque. M 

With  respect  to  the  prosecution  of  clerks,  &c,  for  embezzlement,  it 
may  be  often  material  to  investigate  the  facts,  in  particular  cases,  with 
reference  to  the  principles  following  : — 

Embezzlement  necessarily  involves,  in  the  idea  of  it,  secrecy  and  con- 
cealment. If,  therefore,  instead  of  denying  the  appropriation,  the  pri- 
soner, in  rendering  his  account,  admits  the  appropriation,  alleging  a 
right  in  himself,  &c,  his  offence  is  not  embezzlement,  (s)  So,  where  a 
clerk's  duty  was  to  enter  all  such  moneys  as  he  should  receive,  &c,  in  a 
book,  and  remit  the  amount  weekly,  &c,  and  he  was  found  to  have  made 
entries  regularly,  but  with  respect  to  three  particular  sums,  not  to  have 
remitted  them,  this  was  held  to  be  matter  of  account,  not  felony. (tf) 

On  the  other  hand,  it  has  been  held  that,  where  it  was  the  duty  of  a 
servant  to  account  every  evening  for,  and  pay  over  all  moneys  received 
by  him  for  his  master  during  the  day,  and  he  received  three  several 
sums,  on  different  days,  and  omitted  to  account  for  or  pay  them  over, 
though  without  ever  denying  the  receipt  of  them,  or  ever  delivering  any 
account  in  writing,  in  which  they  were  omitted,  the  wilful  omis-  .-.,.,,_„-. 
sion  *was  equivalent  to  a  denial  of  the  receipt,  and  the  servant  L  -< 
was  found  guilty  of  embezzlement. (w) 

It  was  the  duty  of  the  cashier  of  a  bank  to  receive  cash,  and  enter 
the  amount  so  received  in  a  book ;  and  at  the  close  of  the  business  of 
the  day  to  see  that  the  cash  in  hand  agreed  with  the  sums  entered  in 
this  book,  and  to  strike  a  balance,  and  to  put  the  cash  received  either  in 

m)  2  East,  P.  C.  568. 

n)  R.  v.  Bazeley,  2  Leach,  835.  (o)  R.  v.  Waite,  1  Leach,  28. 

p)  R.  v.  Sullens,  1  Mood.  C.  C.  129. 

q)  R.  v.  Hammon,  R.  &  Ry.  221;  4  Taunt.  304,  S.  C. 

r)  Reg.  v.  Heath,  2  Mood.  C.  C.  33 ;  Reg.  v.  Beaman,  C.  &  Mar.  595. 

s)  Reg.  v.  Norman,  Car.  &  M.  501 ;  see  Reg.  v.  Evans,  infra. 

t)  R.  v.  Hodgson,  3  Car.  &  P.  422 ;  Reg.  v.  Creed,  1  Car.  &  K.  63. 

u)  Reg.  v.  Jackson,  1  Car.  &  K.  384. 

February,  1857. — 15 


208  GRANT    ON    THE    LAW    OF    BANKING 

a  drawer  in  the  counter,  or  in  :i  box,  of  both  of  which  he  had  the  key. 
It  was  part  of  his  duty  to  pay  money,  as  well  as  to  receive  it.  On  a 
certain  day.  the  cash  in  the  book  at  the  close  of  business,  appeared  to 
be  1,762?.,  which  sum  the  clerk  carried  forward,  as  in  due  course  ought 
to  have  been  done.  At  the  close  of  bnainesa  on  the  next  day,  the  clerk, 
after  crediting  himself  with  money  paid  by  hiui,  and  debiting  himself 
with  cash  received,  made  the  balance  in  the  book  1,3092.,  and  that  sum 
he  ought  to  have  had  in  one  or  other  of  the  above-mentioned  places.  It 
was  found,  however,  that  there  was  only  345/.,  leaving  a  deficiency  of 
9642.  The  clerk  never  denied  that  he  was  short.  The  judge  at  the 
trial  directed  the  jury  that,  if  the  clerk  took  the  money  from  the  posses- 
sion of  his  employers,  the  offence  would  be  larceny;  but  if  he  took 
money  paid  to  him  on  account  of  his  employers,  before  it  reached  the 
possession  of  the  employers,  that  would  be  embezzlement;  and  the 
jury — there  being  counts  for  larceny  as  well  as  for  embezzlement — (x\ 
found  him  guilty  of  embezzlement,  and  not  guilty  of  larceny. (y\ 

Discharge  of  Guarantor. — The  guarantor,  for  "  the  true  and  faithful 
discharge  of  the  trusts  which  the  bankers,  his  employers,  might  repose 
in  A.  13.,  acting  as  cashier,  or  superintending  clerk,  in  their  banking 
p-^.-jw,-,  house,"  (which  A.  B.,  *three  years  after  the  date  of  the  gua- 
L  J  rantee,  is  found  to  have  embezzled  a  sum  of  1,292?.  8s.  6c?.,)  is 
not  discharged  by  the  circumstance  of  the  bankers  never  having  given 
actual  notice  of  A.  B.'s  misconduct,  either  to  the  guarantor  or  to  other 
parties,  who  had  also  guaranteed  A.  B.'s  conduct,  until  three  yean  more 
had  elapsed;  at  least,  if  it  be  shown  that  the  guarantor  knew  of  the  tad 
from  other  sources,  it  not  appearing  that  the  hankers  concealed  it  from 
him  industriously. 

Nor  is  the  guarantor,  in  such  case,  discharged,  though  it  appear  that 
the  bankers  have  given  credit,  in  their  books,  for  the  above  amount,  to 
A.  B.,  entering  it  as  a  private  loan,  with  a  view  to  conceal,  the  real  state 
of  the  ease,  from  the  other  clerks,  and  so  to  preserve  the  credit  of  the 
house  from  suffering. 

The  facts  were  left  to  the  jury,  in  an  action  by  the  bankers  on  the 
guarantee,  to  say,  upon  consideration  of  them,  whether  the  hankers,  by 
so  doing,  had  waived  the  guarantee  and  exonerated  the  guarantor;  and 
the  jury  found  for  them. (2) 

In  case  of  a  guarantee  of  this  kind,  the  contract  of  a  guarantor  is  not 
like  that  of  the  parties  to  a  bill,  who  air  only  secondarily  liable,  and  to 
whom  iioi'kc  musi  be  given,  of  the  default  of  the  party  primarily  liable, 
in  order  to  charge  them  ;  lor  tin-  guarantor's  contract  is  no!  that  lie  will 
make  up  any  deficiency,  if  A.  1!.  'lot.-  not,  but  he  IS  hound  absolutely  to 

pay  for  A.  B.'s  deficiency.(a) 

(x)  See  now  11  .v  1:.  Vict.  <■.  loo.  s.  1::. 

• .  7  Car.  a:  1'.  636  :  1  ompare  l:<  g.  v.  Chapman,  1  Car.  &  K.  119. 
(z)  Peel  v.  Tatlock,  I  B.  .v  I'.  419.     A-  to  declaring  on  :i  guarantee  to  bankers, 
5  M.  .v  W.  563;   1  M.  .v  Gra.  u  ;  5  Q.  B.  -    I.     Evidence,  1  Exch.  154. 
(a)  Per  Beath,  J.,  1  15.  &  P.  \n.     Bowever,  a  plea  thai  A.  1'..  has  paid,  ami  1  In 
1  epted,  in  satisfaction  of  all  damages,  &c.,  relating  to  it.  a  certain 
lay  he  a  good  plea  as  to  30  much.     Lyall  v.  Biggins,  4  Q.  IJ.  528. 


GUARANTEES,  BONDS,  ETC.,  GIVEN  TO  BANKERS.  209 

On  the  other  hand,  as  we  have  seen,(/j)  any  variance  in  the  agreement 
to  which  the  surety  has  subscribed,  which  is  made  without  his  knowledge 
or  consent,  which  may  prejudice  him,  or  which  may  amount  to  a  substi- 
tution of  a  new  *agreement  for  a  former  agreement,  even  though  r^979-i 
the  original  agreement  may,  notwithstanding  such  variance,  be  L  J 
substantially  performed,  will  discharge  the  surety. 

This  is  the  rule ;  and  it  may  be  illustrated  by  the  example  following  : 
where  a  surety  guaranteed  the  faithful  and  honest  conduct  of  a  clerk, 
who  was  paid  by  salary,  and  his  employers,  sometime  afterwards,  changed 
this  part  of  their  arrangement  with  him,  and  paid  him  by  means  of  a 
commission,  which  amounted  to  more  than  his  former  salary ;  it  was  held, 
that  the  surety  was  discharged  by  reason  of  the  alteration. (c\  So,  where 
A.  becomes  guarantor  of  the  good  conduct  of  a  clerk  in  a  bank ;  the  clerk 
is,  subsequently,  appointed  to  a  better  situation,  in  a  branch  of  the  bank, 
and  A.  extends  his  guarantee  to  the  conduct  in  this  new  situation.  The 
clerk,  afterwards,  undertakes,  on  having  his  salary  raised,  to  become 
liable  to  one-fourth  of  the  losses  on  discounts,  and  then  allows  a  customer 
to  over  draw,  whereby  the  bank  suffers  loss.  A.  was  held  not  to  be  liable, 
for  this  loss,  to  the  bank,  though  it  was  within  the  terms  of  his  original 
guarantee,  because  the  fresh  arrangement,  made  without  his  knowledge, 
was  a  discharge. (d} 

Change  of  Firm. — The  following  decision  illustrates,  still  further,  the 
position  already  stated,  that,  when,  from  the  terms  of  the  guarantee,  it 
can  be  seen  that  the  intention  was  to  secure  the  good  conduct  of  the 
clerk,  while  serving  the  banking  house,  whether  the  same  persons  who 
constituted  the  partnership  remained  in  it  or  not,  the  obligation  will  be 
treated  as  a  continuing  one,  as  regards  the  changes  in  the  body. 

The  bond  recited  that  the  plaintiffs  had  agreed  to  take  *one  [-#973-] 
Jones  into  their  service,  and  employ,  as  a  clerk,  in  their  shop  L  -» 
and  counting  house,  &c,  and  that  the  guarantor  had  agreed  to  become 
security  for  his  fidelity  j  and  the  condition  was,  that  if  Jones  should 
faithfully  aecount  for,  and  pay  to  the  plaintiffs,  all  sums  of  money,  &c, 
in  the  service  of  the  plaintiffs,  and  did  not  embezzle,  &c,  then  the  con- 
dition to  be  void. 

The  plaintiffs,  in  the  action,  were  the  members  of  the  banking  house 
at  the  time  that  the  bond  was  given,  and  to  whom  the  guarantor  was 
bound ;  but  it  appeared  that,  some  time  after  that  date,  the  plaintiffs  had 
taken  a  fresh  partner,  and  it  was  after  this  change,  in  the  partnership, 
that  th«  clerk's  default  took  place.  The  breach  assigned  was,  that,  after 
the  addition  to  the  partnership,  Jones  continued  in  their  service,  and 
received  a  certain  sum  of  money,  three  quarters  of  which  he  received  on 
account  of  the  plaintiffs,  and  did  not  pay  over,  &c. 

It  is  to  be  observed,  that  the  concern  appears  to  have  consisted  origi- 

(b)  Supra,  p.  180. 

(c)  North  Western  Railway  Company  v.  Whinray,  10  Exch.  77  ;  sec  Evans  v. 
Earle,  id.  1.  When  the  condition  of  the  bond  did  not  contain  any  stipulation  that 
the  same  salary  should  be  continued,  either  express  or  implied,  the  guarantor 
would  not  be  discharged  by  reduction  of  salary.  Frank  v.  Edwards,  8  Exch.  214 ; 
explained,  10  Exch.  81,  82. 

(d)  Bonar  v.  Macdonald,  3  H.  Lds.  226. 


L'10        GRANT  OX  THE  LAW  OF  BANKING. 

nally  of  the  throe  plaintiffs,  the  whole  Dumber  of  partners!  being  four, 
taking  in  the  new  one;  hence  the  plaintiffs  allege,  that  three  parte 

of  the  money,  received  on  account  of  the  house,  belonged  to  them. 

The  court  held  the  intention  of  the  parties  to  the  guarantee  to  be,  a 
-  icurity  to  tht  house,  so  that  no  change  of  partners  would  discharge  the 
guarantor;(e)  and  it  was  observed  that,  in  houses  with  many  clerks,  the 
inconvenience  of  demanding  fresh  security  from  each,  upon  every  change 
of  partners,  would  be  enormous.  (f\ 

Banker*,  lour  to  talc-  gnornntx . — It  was,  in  all  cases,  desirable  that 
bankers,  in  taking  a  guarantee  of  this  description,  should  insist  upon  a 
r*->~.n  ^ond  being  executed  by  the  guarantor,  *as  by  that  means  all  ques- 
L  J  tions  were  got  rid  of,  respecting  the  sufficiency  of  the  statement 
of  the  consideration,  in  the  writing  purporting  to  be  a  guarantee,  to 
support  the  document  as  such.  The  numerous  cases  which  have  been 
c  intested  in  the  courts,  on  this  ground,  in  cases  of  guarantees  by  simple 
contract,  and  the  oftentimes  conflicting  decisions  which  have  been  pro- 
nounced, on  instruments,  very  nearly  approaching  to  identity  of  signifi- 
cation, in  their  terms,  showed  this  very  satisfactorily,  and  rendered  it 
most  unsafe  for  bankers  to  rely  on  merely  written,  not  sealed  and 
delivered,  guarantees. 

With  respect,  however,  to  all  guarantees  given  since  29th  July,  185G, 
the  stat.  19  &  20  Vict.  c.  97,  s.  3,  dispensing  with  the  necessity  for 
the  statement  of  consideration  in  such  cases,  provided  the  undertaking 
be  "  in  writing,  and  signed  by  the  party  to  be  charged  therewith,  or 
some  other  person,  by  him,  thereunto  lawfully  authorized,"  makes  such 
precaution  useless.  Some  of  the  more  immediately  useful  cases,  as  con- 
taining principles  which  may  be  found  still  applicable  to  banking  pur- 
poses, in  this  respect,  are  already  indicated  in  this  work.(y) 

Liability  of  Executor  of  Ghtarantor. — A  clerk,  to  secure  his  ein- 
-,  &c,  joins,  with  two  sureties,  in  executing  a  joint  and  several 
bond  to  bis  employers.     The  period  of  the  clerk's  service  was  undeter- 
mined ;  but  either  party  might  determine  it  at  his  option ;  the  bond  was 
to  extend  over  the  period  of  his  continuance  in  the  service. 

One  of  the  sureties  soon  afterwards  dies,  and  his  executrix  gives 
notice,  to  the  employers,  that  she  should  not  consider  herself  liable  on 
the  bond. 

Bis  employers,  in  consequence,  obtain  from  the  clerk,  the  bond  of  a 
fresh  surety. 

r*o-.--i  *Then  the  surviving  surety  dies,  and  then  the  new  surety; 
L  ~  J  and  lastly,  the  clerk,  four  yean  and  a  half  after  the  first-men- 
tione<l  death  of  the  surety,  himself  dies;  and  deficiencies  are  thereupon 

Barclay  v.  Lucas.  1  T.  It.  291,  n. ;  S.  C,  3  Dougl.  321 ;  Theob.  Princ.  &  Surety, 
ee  supra,  p.  222. 
Bee  also  li'Gahey  v.  Alston,  1  M.  ft  W.  389,  8.  I'.     See,  when  surety  is 
onlv  liable  for  a  limited  period,  as  to  pleading,  ^c,  EitSOD  v.  Julian,  4  E.  &  B. 

(y)  Bee  Kennaway  v.  Treleayan,  5  M.  ft  \V.  498;  and  sec  4  Q.  B.  531;  1  C.  B. 
p<  r  Brie,  J..  Steele  v.  Hoe.  19  L.  J.  |  v  B.)  Q.  B.  93;  3  Q.  B.  333,  and  sup. 
pp.  252-265. 


GUARANTEES,  BONDS,  ETC.,  GIVEN  TO  BANKERS.  211 

discovered  in  his  accounts,  principally  in  respect  of  sums  received  by 
him  after  the  date  of  the  bond  of  the  fresh  security. 

Under  these  circumstances,  the  executrix  was  held  to  have  no  right  to 
restrain  the  firm  from  suing  her  on  the  bond,  the  firm  never  having  re- 
leased her,  as  executrix,  or  given  her  any  intimation  that  they  did  not 
consider  her  liable  ;(/t)  for  the  rule  of  law  is  this — sureties  of  this  de- 
scription are  not  discharged  from  their  obligations,  unless  the  contract 
between  them  and  the  obligees,  is  varied  by  a  positive  contract  between 
the  obligees  and  the  principal,  without  notice  to  the  surety,  (i)  and  it  is 
the  duty  of  the  surety  to  see  that  the  principal  performs  his  obligations, 

&C.(i) 

Bankers  finding  Sureties,  &c. — We  may  close  the  subject  of  guaran- 
tees, by  adverting  to  the  cases  in  which  bankers  may  be  required  to  find 
sureties  upon  their  appointment  as  treasurers,  &c,  to  public  bodies. 

A.,  B.,  &  Co.,  enter  into  a  joint  and  several  bond,  for  the  faithful 
performance,  by  A.,  of  his  duties  as  treasurer  of  a  poor  law  union,  in  re- 
ceiving, &c,  moneys,  &c.  A.  and  another  person  were  bankers,  and  A. 
had,  in  fact,  never  been  in  the  exclusive  receipt  of  the  moneys  of  the 
union,  which  were  paid  into  the  bank;  the  overseers  of  the  parishes, 
constituting  the  union,  having  been  directed,  by  the  board  of  guardians, 
in  their  printed  contribution  warrants,  "  to  pay  to  Messrs.  Brodie  & 
Co.,"  and  the  cheques,  drawn  by  the  board,  requiring  A.  and  his  part- 
ner to  pay,  &c. 

*The  court  held  it  to  be  an  established  principle,  that  for  mo-  r^.7-p-i 
neys  paid  to  two  or  more  parties,  the  surety  for  one  is  not  liable,  L  J 
and  therefore,  that  if  a  person  is  surety  for  another,  for  the  due  account- 
ing for  moneys  received  by  him,  the  receipt  of  moneys  by  that  person, 
and  his  partner,  is  not  the  same  as  the  receipt  by  him  alone,  because  the 
surety  may  be  willing  to  be  accountable  for  one  individual,  but  not  for 
him  and  his  partner,  and  a  payment  to  one  partner  is  a  payment  to  both. 
Here  the  board  drew  cheques  on  the  banking  firm,  treating  them  as  their 
joint  treasurers,  and  from  that  it  was  inferred  that  they  agreed  to  the 
moneys  being  paid  into  the  bank,  to  their  credit,  just  as  any  other 
customer.  Hence,  when  the  bank  failed,  with  a  balance  due  to  the 
union  in  its  hands,  the  sureties  of  A.  were  held  not  to  be  liable,  and  a 
sum  equal  to  the  above  balance  having  been  paid,  to  the  board  of  guar- 
dians, by  one  of  them,  under  a  mistake  of  facts,  was  held  to  be  recovera- 
ble back  again. (k\ 

If  the  guarantee  had  been  for  the  good  behaviour  of  the  partners,  and 
that  they  and  the  survivor,  and  survivors,  of  them  should  account  for, 
&c,  all  moneys  paid  to  them,  or  either  of  them,  or  any  person  thereafter 
in  partnership  with  them,  &c,  the  retirement  of  one  of  the  partners 
would  have  released  the  surety.  (?) 

(h)  Gordon  v.  Calvert,  2  Sim.  235  ;  S.  C,  affirmed,  4  Russ.  581;  see  Hough  v. 
Warr,  1  Car.  &  P.  151. 

(i)  Creighton  v.  Rankin,  7  Cla.  &  F.  325.  The  neglect  of  the  bankers,  in  leav- 
ing in  hands  of  the  clerk,  a  larger  sum  than  the  surety  had  stipulated  should  be 
left,  &c,  &c,  makes  no  difference.  S.  C. ;  see  Lindsay  v.  Lord  Downes,  2  Ir.  Eq. 
R.  307  ;  see  1  id.  448,  450,  n.  (k)  Mills  v.  Alderbury  Union,  3  Exch.  590. 

(Z)  University  of  Cambridge  v.  Baldwin,  5  M.  &  W.  580. 


212  GRANT    ON    THE    LAW    OF    BANKING. 

Reviewing  the  subject  of  this  ohapter,  the  truth  seems  to  be,  that  a 
guarantee  is  extremely  difficult  to  frame  with  sufficieut  circumstantiality 
to  embrace  every  case  that  may  arise  ;  ami  it  is  impossible  to  lay  down  a 
general  form  which  shall  serve  on  every  occasion,  or  even  perhaps  a  form 
which  shall  serve  for  any  other  than  the  objects  which  the  framer  had  in 
his  mind  at  the  time  of  constructing  it.  Very  little  more  can  be  said  for 
the  purpose  of  guidance,  except  that  each  case  is  to  rest  upon  its  own 
circumstances ;  the  practitioner  being  left  to  glean  from  the  mass  of  de- 

j-^., |  cisions,  the  *proper  mode  of  moulding  the  language,  so  as  to 

L         J  adapt  it  to  the  purposes  he  has  to  meet. 

As  regards  evidence  of  the  liability  of  the  guarantor  in  these  cases,  we 
may  point  out — 

1.  That  an  account  delivered  by  his  clerk,  cashier,  &c,  charging  him- 
self, is  evidence  against  the  clerk's  surety. 

2.  That  in  case  such  account  is  made  out  by  the  clerk,  and  he  con- 
tinues to  receive  payments  on  account  of  the  banker,  and  subsequently 
pays  in  moneys,  or  takes  credit  for  salary  or  disbursements,  those  pay- 
ments, &c,  are  not  necessarily  to  be  first  applied  to  extinguish  the  pre- 
vious balance,  when  the  subsequent  receipts  are  equal  to  the  payments, 
&c,  in  amount. (?>i) 


[*278]  *CHAPTER   VIII. 

APPROPRIATION    OF   PAYMENTS. 

A  question  has  very  often  arisen,  where  a  customer  has  a  running 
account  with  a  bank,  the  balance'  of  which  is  sometimes  for  him,  ami  at 
ether  times  against  him,  how  are  the  payments  by  the  bankers  to  be  ap- 
plied ? 

Thus,  in  case  of  a  banking  partnership,  where  one  partner  dies,  and 
the  customer  goes  on  dealing  as  before  with  the  bank,  there  being  no 
new  account,  nor  any  settlement  made,  and  then  the  banking  house  be- 
comes bankrupt,  the  account  at  the  death  of  the  partner  being  about 
1,7' Mi/,  in  the  customer's  favour,  but  being,  afterwards  and  before  the 
bankruptcy,  reduced  by  payments  made  by  the  bankers  on  his  account, 
to  about  450?.  in  bis  favour;  but  again  showing  a  balance  for  him  ex- 
ceeding the  former  amount  "f  1,700/.,  at  the  time  of  the  bankruptcy; 

are  the  payments  made  subsequently  to  the  partner's  death,  by  the  sur- 
vivors, to  be  applied  in  reduction  of  tin  balance  due  to  the  customer  at 
that  period,  so  as  to  discbarge  the  estate  of  the  deceased  pro  tanto,  or  are 
the)'  to  be  considered  as  exclusively  parts  of  the  dealings  between  the 
Burvivors  and  the  customer  ? 

Now  this  question  has  been  settled,  once  for  all,  by  Sir  W.  Grant,  M 
R.,  in  a  decision  which  has  been  universally  followed  and  acted  upon  in 
way. 

(m)  Lysaght  v.  Walker,  5  Bli.  X.  Cas.  1. 


APPROPRIATION    OF    PAYMENTS.  213 

The  case  of  a  banking  account,  where  all  the  sums  paid  in  form  one 
blended  fund,  the  parts  of  which  have  no  longer  any  distinct  existence, 
gives  no  room  for  any  other  appropriation  than  that  which  arises  from 
the  order  in  which  the  receipts  and  payments  take  place,  and  are  carried 
into  the  account.  Presumably  it  is  the  sum  first  paid  in  that  is  first  paid 
out :  it  is  the  first  item  on  the  debit  side  of  the  ^account,  that  is  p^-o-i 
discharged,  or  reduced,  by  the  first  item  on  the  credit  side.  L         J 

Indeed,  this  is  the  principle,  on  which  all  accounts  current,  and 
especially  cash  accounts,  are  settled ;  and  any  other  mode,  (as  the 
Master  of  the  Kolls  shows,)  would  lead  to  extravagantly  unreasonable 
results,  (a) 

If  the  customer  intended  that  this  usual  mode  of  dealing  shall  be 
altered,  or  departed  from,  in  any  way,  it  is  incumbent  on  him  to  signify 
his  intention,  to  that  effect,  to  the  bankers;  but  if  he  receives  his 
account  as  drawn  out,  as  one  unbroken  running  account,  and  makes  no 
objection  to  it  then  it  being  the  usage  in  the  banking  trade,  to  consider 
silence,  on  receiving  an  account  made  out,  to  signify  the  customer's 
acquiescence,  in  the  correctness  of  the  account  in  all  respects,  he  cannot 
afterwards  raise  any  objections. (or) 

The  case  is  strengthened  if  the  customer  draws  cheques  upon  the  bank, 
after  the  death,  where  there  is  no  fund  to  answer  those  cheques,  except 
the  balance  due  to  him,  at  the  time  of  the  death;  for  that  is  treating 
such  balance,  as  the  fund  out  of  which  his  cheques,  notwithstanding  the 
death,  were  to  be  paid ;  and  thus  he  furnishes  distinct  evidence,  beyond 
the  inference  derivable  from  the  nature  of  the  dealings,  and  mode  of 
keeping  the  account,  that  he  gave  express  authority,  that  this  balance  was 
to  be  applied  to  the  cashing  of  his  cheques,  in  the  order,  in  which  they 
were  presented. (a) 

There  is  no  difference  between  the  courts  of  law  and  the  courts  of 
equity,  on  this  question  of  appropriation  ;  both  adopt  the  same  principle 
as  the  ground  of  their  decisions  ;(b)  and  the  rule  is  carried  into  effect, 
even  where  it  operates  to  *the  prejudice  of  a  surety;  even  in  pcogQl 
that  case,  the  earlier  items  of  the  account  will  be  those,  to  which  L  "  J 
the  earlier  payments,  are  to  be  regarded,  as  appropriated,  (c) 

Distinct  Accounts. — It  is  necessary,  however,  to  keep  in  mind,  that 
where  there  are  distinct  accounts  kept,  and  the  customer  is  overdrawn 
and  makes  a  general  payment,  without  specifically  appropriating  it  at 
the  time,  and  there  is  no  course  of  dealing,  or  other  circumstances, 
showing  clearly  how  he  must  have  intended   to  appropriate  the   pay- 

(«)  Clayton's  ease,  1  Meriv.  608-610,  611.  See  4  Russ.  468;  3  Moo.  &  S.  175. 
The  customer  has  a  right  to  resort,  for  payment,  of  what  is  due  to  him,  out  of  the 
estate  of  the  deceased  partner,  to  that  estate,  without  regard  to  the  state  of  the  ac- 
count, as  between  the  deceased  and  the  surviving  partners.  Devaynes  v.  Noble,  2 
Russ.  &  M.  495. 

(b)  Bodenham  v.  Purchas,  2  B.  &  A.  45.  See  Simson  v.  Ingham,  2  B.  &  C.  72  ; 
Anon.  Cro.  Eliz.  68 ;  Goddard  v.  Cox,  2  Stra.  1194  ;  Bull.  N.  P.  174 ;  Pinnel's  case, 
5  Rep.  117. 

(c)  Williams  v.  Rawlinson,  3  Bing.  71.  See  Ex  parte  Sharp,  3  Mont.  D.  &  D.  G. 
490,  where  the  bankers  knew  of  the  customer's  act  of  bankruptcy  before  they  took 
the  security,  the  guarantor  being  ignorant  of  it. 


2U  ,:  R  A.NI    ON    T  II  E    L  A  W    0  F    B  A  X  K  INC. 

ment,(<2)  rtAod  is  nut  a  case  within  the  rak  we  have  been  stating,  which 
applies  (inly  in  case  of  a  running  anbroken  account:  that  is  a  case  in 
which  the  hanker  may  apply  the  payment  to  which  account  he  plea-. 
and  he  is  not  bound  to  d<>  it  instantly,  hut  may  take  a  reasonable  tim 
<  hi  the  other  hand,  if  the  customer  owes  the  banker,  on  several  accounts, 
and  pays  in  money,  he  the  customer,  has  a  right  to  say  at  t/n  time,  to 
which  debt  the  payment  shall  he  applied,  (e) 

Partnership. — Surviving  partners  in  a  bank,  may  on  the  death  of  a 
partner,  object  to  continue  an  account  with  a  customer,  as  one  unbroken 
account;  and  it  is  no  proof  that  they  have  elected  to  treat  it," as  a  con- 
tinuance of  the  old  account,  to  show  entries  in  the  bank  books  to  that 
effect,  if  they  were  not,  at  the  time  communicated  to  the  customer.(e) 

The  same  principle  applies  when  the  partnership  expires :  thus, 
Brooke,  a  lieutenant-colonel  in  the  army,  employ-  one  Gilpin,  as  army 
r*-->sn  agent  and  banker,  to  receive  his  pay  and  *allowauces,  and  also 
L  ~c  -I  dividends  on  his  stock,  and  other  moneys  on  his  account,  and 
from  time  to  time,  to  make  payments  to  him  or  his  order,  for  which  pur- 
pose he  was  in  the  habit  of  drawing  on  Gilpin,  who  from  time  to  time, 
sent  in  his  account,  to  the  employer. 

Brooke  continued  to  employ  Gilpin,  in  this  way,  from  some  time  be- 
fore the  year  1807,  down  to  the  year  1819,  when  Gilpin  became  bank- 
rupt ;  no  rest  was  being  made,  or  balance  struck  in  the  account  after  1st 
July,  1816;  and  during  the  whole  period  of  the  account,  there  was 
always  a  considerable  balance  due  to  Brooke. 

OnlMth  September,  1SI)7,  Gilpin  entered  into  partnership  for  a  period 
often  years,  with  one  Enderby,  but  the  business  continued  to  be  trans- 
acted in  the  name  of  Gilpin  alone,  and  Brooke  had  no  notice  or  know- 
of  the  partnership  until  after  the  bankruptcy  of  Gilpin  ;  and  the 
receipts  and  payments  prior  and  subsequent  to  24th  September,  1817, 
when  the  partnership  expired  formed  part  of  one  general  account. 

Then  on  Brooke  bringing  an  action  against  Enderby  and  Gilpin,  to 
recover  the  balance  due  to  him  at  the  expiration  of  the  partnership,  it 
tras  held  that  (Gilpin  having  pleaded  his  bankruptcy,)  Enderby  was  en- 
titled to  consider  any  sums  paid  by  Gilpin  after  the  expiration  of  the 
partnership,  as  being  paid  in  reduction  of  the  balance,  then  due  to 
Brooke,  and  might  take  credit  for  them,  without  giving  credit  to  Brooke, 
for  any  sums  received  after  the  expiration  of  the  partnership,  by  Gilpin 
on  account  of  Brooke. (/") 

The  rule  is  quite  settle. 1.  On  the  one  hand  moneys  drawn  out  on  a 
hanking  account,  are  to  be  applied  to  the  earlier  items  on  the  opposite 
side  of  the  account.  By  every  payment  which  he  makes  the  banker  dis- 
charges so  much  of  the  debt  which  he  first  contracted/^)     On  the  other 

(>/)  See  wii-.,n  v.  Hirst,  4  B.  ft  A-l.  766;  Stoveld  v.  Bade,  t  Bing.  154;  Lysnght 

v.  Walker,  5  Mi.  \.  ('a-.   1  :    BrOWD  v.  Ami.  r.-.m.  2  Men.  1'.  C.  245. 

:         tn,  i  B.  ft  0.  72, 15.     Entry  in  the  customer's  books  notevi- 

fthe  appropriation  by  him.     Manning  v.  \\'<   terne,  2  Vera.  606. 

(/)  Brooke  v.  Enderby,  2  Bro.  ft  B.  Tonlmln  v. 

Copland,  2  Cla.  ft  I-'.  6  I  Scotland  v.  Christie,  8  Cla.  &  F.  227, 

■     I  ted  l  Meriv. 

i<j)  Pennell  v.  Deffel,  i  De  <:.  M.  *  ,;-  391.     The  rub  tether  the 


LIEN.  215 

hand;  *moneys  paid  in  by  the  customer,  go  in  discharge  of  any  r*ocoi 
debt  which  may  be  due  on  the  account  from  him  to  the  banker,  L  J 
at  the  time  of  his  paying  in  the  money ;  applying  in  like  manner,  any 
part  payment  to  the  discharge  of  the  earlier  debt. 

It  is  equally  certain,  however,  that  a  particular  mode  of  dealing,  and 
more  especially  any  stipulation  between  the  parties  may  entirely  vary  the 
case.  Thus  if  a  bond  were  given  by  several  persons,  including  a  cus- 
tomer, to  secure  bankers  against  advances  which  they  might  from  time 
to  time  make,  to  the  extent  of  1,000?.,  to  the  customer  :  that  would  show 
that  the  amount  of  it  was  not  to  be  brought  into  the  account,  as  one  of 
the  items,  but  that  it  was  to  be  a  continuing  security,  so  that  although 
between  the  date  of  the  bond  and  the  failure  and  bankruptcy  of  the  cus- 
tomer, the  balance  in  his  favour  had  been  larger  than  the  amount  due 
upon  the  bond,  for  principal  and  interest,  that  circumstance  does  not 
show  that  the  sum  in  the  bond  is  to  be  taken  as  paid  oif  ;{Ji\  and  the 
same  might  be  the  case,  though  the  bond  were  not  so  worded,  but  if  the 
conduct  and  expressions  of  the  parties  were  such  as  to  show  that  a  con- 
tinuing guarantee  was  contemplated.  (7t) 

Legal  Items. — If  there  be  a  running  account  between  the  customer 
and  the  bankers,  and  the  bankers  make  large  advances  to  him,  part 
of  these  advances  arising  out  of  illegal  and  part  out  of  legal  transac- 
tions, and  the  customer,  from  time  to  time  deposits  bills  and  makes  pay- 
ments, without  any  specific  appropriation,  or  any  settlement  of-  the 
account ;  it  will  be  held  that  the  payments  must  be  applied  to  the  reduc- 
tion of  the  earlier  items  of  the  account,  and  the  legal,  and  not  the  illegal 
part  of  the  demand. (A 


*CHAPTEK    IX.  [*283] 


LIEN. 


With  respect  to  questions  of  lien,  the  following  may  be  stated,  as, 
for  the  most  part,  indisputable  propositions  : — 

The  general  lien  of  bankers  is  part  of  the  law  merchant,  to  be  judicially 
noticed,  like  other  parts  of  that  law. (a) 

Securities  for  Special  Purposes. — A  banker's  lien  does  not  attach,  on 
securities,  placed  in  his  hands  for  a  special  purpose,  ex.  gra.,  where 
exchequer  bills  are  deposited,  in  order  that  he  may  receive  the  interest 
on  them,  and  get  them  exchanged  for  fresh  bills ;  for  such  special  pur- 
pose is  inconsistent  with  the  notion  of  a  general  lien,  inasmuch  as  the 
bankers  undertake  to  do,  what  is  usual  for  bankers  to  do,  as  regards  the 

account  is  kept  with  the  customer,  as  regards  his  own  money,  or  that  of  a   cestui 
que  trust ;  S.  C. 

(h)  Henniker  v.  Wigg,  4  Q.  B.  792. 

(i)  Ex  parte  Randleson,  2  Deac.  &  C.  534  ;  Wright  v.  Laing,  3  B.  &  C.  1G5. 

(a)  Brandao  v.  Barnett,  12  Cla.  &  F.  787,  802,  806,  808,  810. 


216         GRANT  UN  THE  LAW  OF  BANKING. 

exchequer  bills  ;  in  other  words,  they  agree  to  return  the  bills,  (or  to  do 

what  is  equivalent  to  returning  them,)  as  b i  as  the  particular  thing, 

for  which  the  bills  hare  been  intrusted  t"  them,  has  been  performed 
Now,  an  undertaking  to  return  a  thing,  by  a  given  day  or  hour,  is  mani- 
festly inconsistent  with  the  claim  of  a  genera]  lien  on  the  thing,  by  the 
party  undertaking.  It  is  acoording  to  the  same  principle,  that  if  a 
customer  goes  to  his  banker,  requesting  him  to  get  a  bank  post  bill,  for 
the  purpose  of  transmitting  into  the  country  1,000/..  which  he  hands 
over  to  him  in  bank  notes,  the  banker,  unless  he  expressly  states  that 
he  receives  the  notes,  only  subject  to  his  lien,  lias  no  right  to  retain,  or 
apply  them,  to  any  ether  purpose  than  that  tor  which  he  receives  them. 
...  But,  unless  there  be  an  express  contract,  or  circumstances 
L  ~  -I  ^showing  an  implied  contract,  inconsistent  with  the  principle  of 
lien,  bankers  have  a  general  lien  on  all  securities  deposited  with  them, 
(/*•  bankers,  by  their  customers. (a) 

Plate. — Accordingly,  bankers  have  no  lien,  for  the  balance  of  their 
account,  against  a  customer,  on  his  plate,  deposited  in  his  chest,  with 
them,  for  safe  custody.(i) 

Trust  Deeds. — Xor  can  bankers  carry  into  effect  any  lien,  which  they 
may  prima  facie  have,  upon  securities  deposited  with  them,  which  are, 
in  fact,  trust  deeds.  Thus,  if  a  customer  deposits  title  deeds,  as  a 
security  for  advances,  and  the  property  comprised  in  the  deeds  is  subject 
to  a.  trust,  in  breach  of  which  the  deposit  is  made,  then,  although  the 
bankers  have  no  notice  of  the  trust,  it  must  prevail,  against  their  fien.(c) 

Mistake. — Xor  has  a  banker  any  lien  on  securities,  by  mistake,  or 
casually',  left  at  the  bank,  upon  the  occasion  of  an  application  to  him,  to 
advance  money  on  them,  which  he  had  refused  to  doj(t?)  and  if  a 
customer  has  deposited  securities,  with  his  bankers,  to  indemnify  them, 
to  the  extent  of  1,000/.,  then  advanced  by  them,  and  afterwards  becomes 
indebted  to  them,  in  an  additional  sum  of  500?.,  on  his  running  account 
with  them,  they  have  no  lien  on  these  securities,  beyond  the  1,000/., 
and  interest. (< ) 

r*.->or-\  Shares. — Again,  in  such  a  case  as  the  following,  tin;  ^bankers 
L  J  have  no  lien.  A.,  one  of  the  trustees  of  a  fund,  holds  certain 
shares,  in  a  banking  company,  in  his  own  right,  and  deals  with,  and 
purchases  shares  therein,  to  a  considerable  extent.  A  portion  of  the 
trust  fund  is  invested,  in  shares,  in  A/a  name.  There  was  no  distin- 
guishing mark,  by  which  the  individual  shares  could  be  traced,  the  whole 
being  in  tin?  nature  of  capital,  expressed  by  terms  of  quantity.     A.  then 

agrees  to  assign  a  certain  number  of  the  shares,  standing  in  his  name, 
to  the  banking   company,  a-  Beouritj   for  repayment  of  advances,  which 

(a)  Sec  note  fa  ,  previous  | 

Sec  argu.  K\  parte  Eyre,  l  Phill.  Oh.  B.  235  ;  also  1 '-'  Ola.  &  F.  794,  797; 
P<r  Lord  Campbell,  Brand ao  v.  Harnett,  1^  (la.  .v.  F.  809;  and  see  O'Connor  v. 
Majoribanks,  I  M.  .v  Gra.  435.  A-  to  right  t..  in  peel  contents  of  chest  of  heir 
loom-,  fcc.,  Karl  of  Macclesfield  \.  Davies,  3  Vea.  &  \'>.  L6. 

Kanningford  v.  Toleman,  1  Coll.  Ch.  K.  670.  See  Moore  v.  Jervis.  2  Coll. 
Ch.  K.  60. 

Lm  b    i .  Dorrien,  7  Taunt.  279. 

v.  Willi--.  3   Hie.  Oh.  0.  21  :   Zinck    v.    Walker.  J  W.  Bla.  1154; 
gee  A.-hton  v.  Dalton,  'J  Coll.  Clia.  K. 


LIEN.  217 

had  been  made  to  him,  by  them  :  but  no  formal  transfer  was  ever  made. 
A.  then  becomes  bankrupt,  not  having  in  his  ownership,  at  the  time, 
a  sufficient  number  of  shares,  to  satisfy  the  trust,  and  also  to  execute  the 
agreed  assignment,  to  the  banking  company. 

Here  the  banking  company  have  no  lien,  on  any  of  the  shares,  which 
A.  had  held  in  trust;  and  though  the  shares  held  in  trust,  being  origi- 
nally purchased  with  trust  money,  possibly  might  have  been  dealt  with, 
by  sale  and  repurchase ;  the  trustee  must  still  be  considered  as  holding, 
for  the  purposes  of  the  trust,  the  same  number  of  shares  out  of  a  larger 
number,  which  stood  in  his  name  at  the  time  of  the  bankruptcy :  and 
of  the  two  equities,  that  of  the  cestuis  que  trustent,  and  that  of  the  bank- 
ing company, — no  actual  assignment  of  the  shares  having  been  made, 
pursuant  to  the  agreement, — the  former  prevails,  following  the  same  rule 
in  this,  as  we  have  seen  adopted  in  other  instances,  and  the  cestuis  que 
trustent  are  not  bound  to  give  notice  of  the  trusts  to  the  bank.(/) 

On  the  other  hand,  as  regards  any  shares  in  which  A.  was  beneficially 
interested,  the  agreement  to  assign  would  give  the  banking  company  an 
equitable  lien  upou  them  as  security,  *so  far  as  they  would  pr^g-i 
extend  for  advances  to  A.,  as  against  A.'s  assignees  on  his  bank-  L  J 
ruptcy.(^) 

Nor  can  it  be  successfully  argued,  that,  in  case  of  a  shareholder  of  a 
banking  company,  being  a  joint  stock  company,  the  shares  are  the  sub- 
ject of  lien,  in  favour  of  the  banking  company,  on  the  ground  that  the 
shareholder  being  a  partner,  then,  in  case  he  is  indebted  for  advances, 
or  might  be  found  to  be  indebted,  upon  winding  up  and  balancing  the 
accounts,  the  bank  have  a  right  to  retain  the  shares  in  order  to  secure 
themselves. (A)  Even  in  the  case  of  a  common  partnership,  such  a 
doctrine  is  to  be  taken  with  very  great  allowance;  because,  in  such 
case,  there  must  be  a  winding-up  and  dissolution,  before  you  can  tell 
what  one  partner  owes  to  another.  But  the  very  object  of  a  joint  stock 
bank  is,  to  enable  persons  to  enter  and  quit  the  concern,  without  the 
necessity  of  a  winding-up  or  dissolution,  and  when  you  cannot  tell  how 
the  account  may  stand  between  the  parties  :(h)  and,  therefore,  in  the 
absence  of  special  provision  in  the  deed  of  settlement,  one  of  the  share- 
holders borrowing  of  the  bank,  is  put  in  the  same  position  as  any  other 
customer.  (Ji) 

It  appears  not  to  be  disputed,  that  the  right  which,  by  the  deed  of 
settlement,  the  directors  of  a  joint  stock  banking  company  may  have, 
of  objecting  to  the  transfer  of  shares  cannot  be  exercised,  for  the  pur- 
pose of  exacting  payment  of  a  debt  due  to  the  bank,  from  the  shareholder, 
whose  shares  are  proposed  to  be  transferred. (V) 

( /)  Murray  v.  Pinkett,  12  Cla.  &  F.  764 ;  the  certificates  of  the  shares  were  in- 
dorsed, "160  Irish  Provincial  Bank  Share  Certificates  ;  name,  John  Wright,  Esq., 
in  trust  for  J.  Johnson,"  id.  779.     See  2  Hare,  127,  132. 

(g)  Murray  v.  Pinkett,  12  Cla.  &  F.  780,  781.  See  S.  C,  2  Hare,  120,  127,  129. 
The  shares  held  on  trust  could  not  pass  to  the  assignees ;  see  12  Cla.  &  F.  782. 

(h)  12  C.  &  F.  783,  784;  see  2  Hare,  120,  130,  131. 

(i)  Pinkett  v.  Wright,  2  Hare,  120;  Ex  parte  Caldecott,  2  M.  D.  &  D.  U.  388, 
per  Lyndhurst,  C. 


21S         SB  ANT  ON  THE  LAW  OF  BANKING. 

In  the  following  case,  from  somewhat  different  facts,  a  different  con- 
clusion was  drawn. 

One  of  the  provisions  of  the  settlement  died  of  a  hanking  company, 
was,  that  the  company  should  have  a  lien  on  the  shares  of  such  proprie- 
r*987i  ^ors>  a*  were  (-'ustulnr1*"'  and  indebted  *to  the  bank,  and  that  do 
L  J  share  should  be  transferred,  without  the  consent  of  the  directors. 
An  abstract  of  these  rules  was  indorsed  on  the  certificate  of  each  share. 

In  such  a  company  the  Bhares  of  indebted  customers  do  not  pass  to  the 
assignees  of  the  customers,  on  their  bankruptcy,  so  as  to  defeat  the  lien 
of  the  bank.  (A-) 

In  case,  however,  there  had  been  no  rule  requiring  the  order  of  the 
directors  for  the  effectual  transfer  of  shares,  and  no  stipulation  for  lien, 
<S:c.,  so  that  an  owner  would  have  had  unrestrained  power  of  disposing  of 
his  shares;  there  the  shares  would  have  been  considered  to  be  in  the  or- 
der and  disposition  of  the  owner  at  the  time  of  his  bankruptcy,  and  to 
pass  to  his  assignees  accordingly. (/) 

Trust  Moneys. — But  a  transaction,  such  as  the  following,  gives  a  suffi- 
cient lien. 

The  trustees  of  a  trust  fund  have  an  account  with  the  East  of  England 
Joint  Stock  Banking  Company,  as  such  trustees.  One  of  the  cestuis  que 
trustent  has  a  private  account  with  them,  which  is  much  overdrawn  ; 
upon  their  agreeing  not  to  press  for  the  reduction  of  the  balance  against 
him,  he  offers  to  give  them  a  lien  on  the  moneys  coming  to  him  in  re- 
spect to  his  share  of  the  trust  fund :  and  to  this  they  agree.  Accord- 
ingly, he  addresses  a  letter  to  one  of  the  trustees,  authorizing  and  re- 
qnesting  him  to  pay,  to  the  credit  of  his  (the  cestui  que  trust's}  account 
with  the  bank,  such  sums  as  might  be  awarded  to  him  out  of  the  trust 
fund.  This  was  held  to  give  the  bankers  a  valid  lien  upon  the  proceeds 
of  the  fund,  and  being  intended,  by  both  parties,  at  the  time  it  was  given 
and  received,  to  be  irrevocable,  must  be  considered  in  equity  to  be  so  to 
all  intents  and  purposes. (m\ 

j-^oqq-i  *Bit/s  of  Exchange. — So  if  a  customer  lodges  undue  bills  of 
L  ,  6  -I  exchange  in  the  hands  of  his  banker  at  Bristol,  and  draws  upon 
them  for  any  money  he  wants,  in  advance,  the  banker  charging  no  in- 
terest on  these  advances,  but  selecting  out  of  the  bills  such  as  were  near- 
est in  amount  to  the  sum  advanced  and  discounting  these,  debiting  the 
customer  with  the  amount  of  such  discount,  in  his  account,  but  without 
any  special  agreement  to  that  effect;  then  there  is  nothing  in  these  cir- 
cumstance to  invalidate  the  banker's  right  of  lien,  for  his  balance,  on 
all  other  bills  placed  in  his  hands  by  the  Gustomer,(n)  besides  those  that 
he  discounts;  and  it  seems  to  be  universally  true,  that  a  customer  can- 
not get  back  paper  gecurities,  in  his  banker's  hands,  without  paying  the 


(!;)   Ex  parte  Plant,  4  Deac.  k  0.  160. 

(/)  Nelson  v.  London  Assurance  Company,  2  Sim.  &  S.  292;  see  4  Deac.  &  C. 
166. 

(m)  Eh  parte  Steward,  3  M.  I».  >v  D.  G.  265. 

(n)  Iii-,:-  7.  Bowsher,  5  T.  R.  188.     Tie-  seems  to  have  been  the  general  d 
of  bankers,  a<  Bri  tol,  about  the  year  1794  ;  but  the  court  disclaimed  decidii 
the  particular  local  a 


LIEN. 


219 


balance  against  him,  unless  there  be  some  special  contract  between  the 
banker  and  the  customer. 

Title  Deeds. — A.,  being  entitled  to  one-third  part  of  some  freehold 
property,  in  his  own  right,  and  to  another  third  part  as  heir  at  law  to 
his  brother,  deposits  the  title  deeds  of  the  property  with  his  bankers,  as 
security  for  advances.  The  personal  property  of  the  deceased  brother, 
who  was  a  trader  subject  to  the  bankrupt  laws,  was  insufficient  to  dis- 
charge his  debts,  and  therefore  his  third  of  the  property  became,  by 
virtue  of  a  statute  then  in  force,  11  Geo.  IV.  and  1  Will.  IV.  c.  47,  s. 
9,  assets  for  the  payment  of  his  debts. 

Nevertheless,  it  was  held,  that  the  banker's  lien  extended  over  both 
thirds  of  the  property,  in  preference  to  any  claims  of  the  creditors  of  A.'s 
brother,  (o) 

Partnerships. — Bankers  have  no  lien  on  the  deposit  of  a  partner,  on 
his  separate  account,  for  a  balance  due  to  the  bank  from  the  firm.(p) 

*  Exchequer  Bills. — The  rule  is  so  strong,  as  regards  the  lien  r-^noq-i 
on  securities,  which  come  into  the  bankers'  hands,  without  being  L  ^  J 
appropriated  to  any  special  purpose,  or  intrusted  to  them  for  safe  cus- 
tody, or  the  like,  that  it  attaches  on  bills  and  notes  payable  bearer,  or  on 
exchequer  bills  which  pass  by  delivery,  although  the  customer  deposit- 
ing them  were  not  the  real  owner,  and  had  no  authority  to  saddle  the 
property  in  them  with  a  lien. (2) 

Promissory  Notes. — On  the  other  hand,  if  I  deliver  promissory  notes 
to  a  person  to  get  discounted  for  me,  and  he  carries  them  to  his  banker 
for  that  purpose,  but  the  banker  insists  upon  placing  the  notes  to 
the  credit  of  the  customer,  whose  account  shows  at  the  time  a  balance 
against  him,  the  banker  will  be  obliged,  in  ecpiity,  to  account  to  me.(r) 

If  bills  of  exchange  be  deposited,  indorsed,  with  the  bankers,  they 
have  the  absolute  power  of  disposing  of  them;  if  the  bankers  become 
bankrupt,  although  the  customer  may  recover  such  of  the  bills  as  re- 
main in  specie,  subject  to  the  bankers'  lien,  for  the  balance  of  his  ac- 
count, yet  he  cannot  follow  the  proceeds  that  may  have  been  converted 
to  the  bankers'  use.(s) 

Realizing  Lien. — Little  has  been  decided  to  illustrate  how  the  law 
provides  that  the  banker  is  to  realize  and  make  productive  his  lien  on 
securities,  &c. 

In  case  of  any  negotiable  security,  which  comes  to  his  hands  on  ac- 
count of  a  customer  to  whom  the  banker  is  in  advance,  he  has,  as  has 
been  said,  a  lien  or  power  of  detention ;  and  in  order  to  make  such 


power  productive,  he  may  *put  the  negotiable  instrument  in  suit,(/) 


[*290] 


(0)  Ex  parte  Baine,  1  M.  D.  &  D.  G.  492. 

(p)  Watts  v.  Christie,  11  Beav.  546. 

(q)  Barnett  v.  Brandao,  6  M.  &  Gra.  630. 

(r)  See  Lord  Bolingbroke's  case,  stated  by  Lord  Redesdale,  G,  Irel.,  in  Joy  v. 
Campbell,  1  Sch.  &  L.  346. 

(s)  Ex  parte  Pease,  1  Rose,  232  ;  Ex  parte  "Wakefield  Bank,  id.  243 ;  see  19  Ves. 
25,  S.  C.  It  is  considered  a  discreditable  thing  for  bankers  to  carry  into  the  mar- 
ket bills  which  are  specially  indorsed,  id.  251 ;  and  see  Ex  parte  Leeds  bank,  id. 
254;  Ex  parte  Twogood,  19  Ves.  229. 

(t)  Bolland  v.  Bygrave,  Ry.  &  M.  271 ;  Bosanquet  v.  Dudman,  1  Stark.  R.  1. 


220  .RANT    ON    THE    LAW    OF    BANKING. 

and  recover  upon  it  so  niuch  as  will  coyer  the  balance  due  to  him  from 
the  customer- («) 

But,  instead  of  advancing  their  remedy,  bankers  will  destroy  their 
right  of  lien,  if  after  lien  has  been  established  they  take  a  security, 
which  is  payable  nt  <>  <Ii*ttmt  day,  for  the  debt.(x) 


[*291]  CHAPTER   X. 

PARTNERSHIPS    AT    COMMON    LAW. 

Many  ijuc-tions  arise  in  banking  transactions,  which  arc  governed  by 
the  rules  relative  to  partnerships,  which  prevail  at  common  law.  We 
shall  at  present  consider,  as  well  such  questions  as  seem  to  be  of  import- 
ance to  private  banks,  carrying  on  business  in  partnership,  or  under  a 
firm,  as  such  as  usually  arise  in  the  business  of,  and  as  are  of  import- 
ance to  bankers,  of  whatever  class,  who  deal  with  firms  of  partners,  as 
customers. 

Cases  respecting  copartnerships  in  banking,  under  7  Geo.  IV.  c.  46, 
as  they  stand  upon  different  and  special  grounds,  have  been  treated 
apart ;  and  the  same  has  been  done  with  respect  to  joint  stock  banking 
companies. 

Bankruptcy. — Three  persons  carry  on  business  as  bankers,  in  partner- 
ship, being  interested  in  the  concern  in  definite,  but  unequal  proportions. 
The  firm  becomes  bankrupt,  but  eventually  both  the  joint  and  separate 
debte  arc  paid  in  full,  with  interest.  In  order  to  accomplish  this,  how- 
ever, the  assignees  sell  real  estates  of  one  of  the  firm,  to  a  large  value, 
and  on  the  whole,  he  contributes  to  the  losses  of  the  firm,  upwards  of 
16,000?.  beyond  bis  proportionate  share.  Part  of  the  estates  were  sold 
in  bis  lifetime;  part  were  contracted  to  be  sold,  but  were  not  actually 
sold,  at  the  time  of  his  death ;  the  remainder  were  sold  after  his  death, 
and  a  surplus  remained  in  the  hands  of  the  assignees.  He  died  intes- 
tate;  and  his  heir  at  law  took  out  letters  of  administration. 

Sir  John  Leach,  M.  11.,  held  the  real  estate  sold,  or  contracted  to  be 

nnn-i  sold,  in  the  lifetime  of  the  deceased  partner,  :  must,  at  bis  death, 
L  "'  J  be  considered  as  converted  into  personalty  :  but  the  real  estate, 
which  was  unsold  and  uncontracted  for  at  the  death,  descended  to  the 
heir,  subject  to  the  charges  created  bv  the  bankrupt  laws;  and  the  sur- 
plus moneys  in  the  hands  of  the  assignees,  in  the  amount  of  the  pro- 
duce of  the  property  sold  since  the  death,  belonged  to  the  heir,  with 
interest,  (a) 

(m)  Scott  v.  Franklin,  l.".  I.  The  li'  d  is  only,  at  most,  co-extensive  with 

ilance  due,  per  Byre,  0.  J.,  Bolton  v.  Puller,  1  Bos.  &  P.  546;  see  Giles  v. 
Perkins,  9  Bast,  L2. 

(/)  Cowell  v.  Simpson,  1G  Ves.  278;  SewisOD   v.  Guthrie,  3  Scott,  R.  311:  see 

•axon  v.  Blakelock,  1  Man.  &  S.  535. 
(a)  Banks  v.  Scott,  5  Madd.  493. 


PARTNE11SHIPS    AT    COMMON    LAW.  221 

Acts  of. single  Partners. — One  of  the  partners  in  a  bank  causes  stock, 
belonging  to  a  customer  of  the  bank  to  be  sold  out,  by  means  of  a  power 
of  attorney,  which  he  forges.  The  proceeds  of  the  stock  were  paid  to 
the  account  of  the  banking  firm  at  the  house  of  the  bank's  agents,  and 
were  appropriated  by  the  partner,  who  was  afterwards  found  guilty  of 
other  forgeries,  and  hanged.  His  partners  were  in  fact  ignorant  of  the 
fraud,  but  might  have  known  it  by  the  exertion  of  common  diligence. 
The  customer  was  held  to  have  an  action  against  the  partners  for  the 
amount.  (b\ 

Also,  in  such  a  case,  Courts  of  Equity,  for  the  protection  of  those 
who  deal  with  partnerships,  impute  knowledge,  and  hold  the  firm  to  be 
individually  liable,  (c) 

So  it  has  been  laid  down,  that  if  one  partner  in  a  banking  house  col- 
lude with  a  member  of  a  trading  firm,  in  a  transaction  connected  with 
the  business  of  the  bank,  the  banking  firm  are  liable  to  the  trading  firm 
for  any  damages  which  the  latter  may  have  suffered  by  reason  of  such 
transactions.  The  plaintiffs,  Longman  &  Co.,  booksellers,  &c,  banked 
with  Pole  &  Co.  On  a  certain  day,  Hurst,  a  partner  in  the  plaintiff's 
house,  sent  cash  to  the  bank,  in  order  to  take  up  three  bills  of  exchange, 
accepted  by  him  in  the  name  of  the  firm,  and  coming  due  next  day. 
The  bills  were  taken  up,  but,  by  Hurst's  order,  were  not  entered  in  the 
books  of  Longman  &  Co.  About  the  same  period,  it  ^appeared  r*9cm 
in  evidence,  Downes,  a  partner  in  the  bank,  told  one  of  the  L  J 
clerks  that  a  bill  of  Longman's  would  come  in  on  such  a  day,  which 
was  to  be  paid,  and  given  over  to  him  (Downes,)  and  that  he  was  to 
debit  Hurst  with  it  in  the  note  hook,  in  which  private  transactions  were 
entered,  so  that  it  might  not  go  into  the  ledger.  Downes  soon  after- 
wards gave  a  similar  direction,  respecting  another  bill  of  the  same  kind ; 
and  these  bills  were  entered  into  the  note  book  accordingly,  and  the  cash 
payments  were  entered  in  the  same  book  to  Hurst's  credit,  and  conse- 
quently, no  trace  of  these  transactions  appeared,  either  in  the  pass  book 
of  the  bankers,  or  in  the  cheque  book  of  Longman  &  Co.  Hurst  after- 
wards retired  from  the  partnership,  receiving  the  full  amount  of  his 
capital,  and  became  bankrupt.  Longman  &  Co.  were  subsequently 
obliged  to  pay  bills  accepted  by  him  in  the  name  of  the  firm,  to  a  very 
large  amount.  An  action  was  considered  to  be  clearly  maintainable  by 
Longman  &  Co.  against  Pole  &  Co.,  in  respect  of  the  damages  arising 
to  the  former,  out  of  the  collusion  of  one  of  the  latter  firm  with 
Hurst,  (d) 

Where  one  of  several  partners  in  a  banking-house  drew  a  bill  in  his 
own  name  upon  a  third  party,  who  accepted  it,  upon  condition  that  the 
drawer  should  provide  for  it  when  due,  the  firm  were  adjudged  to  be 
bound  by  this  act  of  the  partner,  and  they  were  not  allowed  to  sue  the 
acceptor ;  for  the  partner,  not  having  performed  the  condition  on  which 
the  acceptor  accepted,  could  not  have  done  so,  and  they  could  not  be  in 
a  better  position  than  he  was.(e) 

(b)  March  v.  Keating,  2  Cla.  &  P.  250.  (c)  Sadler  v.  Lee,  6  Beav.  324. 

(d)  Longman  v.  Pole,  Danson  &  L.  126 ;  S.  C,  Moo.  &  M.  223. 
(<?)  Sparrow  v.  Chisman,  9  B.  &  C.  241. 


222        CRANT  ON  THE  LAW  OF  BANKING. 

One  of  Beveral  partners,  on  reoeiving  twenty  shillings  from  a  person, 
hands  to  him  a  ticket  in  the  Double  Exchange  Lottery,  undertaking  to 

pay  over  to  him  whatever  benefit  should  turn  up  uu  it;  the  ticket  oomes 
up  a  £40  benefit \  the  partner  refuses  to  pay  over;  the  firm  are  held  to 

a-  ...  he  liable  ;  the  transaction  being  in  the  ih>  n  usual  course  of  *busi- 
L  ~l  J  ness,  and  there  having  been  no  disclaimer  of  the  partner's  act.  (f\ 
This  decision  turns  on  the  principle  of  law  by  which  all  the  firm  are 
made  responsible  for  the  particular  undertakings  or  contracts  of  each. 
relating  to  business  transacted  by  the  linn;  and  this  is  the  ease,  even 
where  the  business,  so  transacted,  is  out  of  the  regular  course  of  the 
bankers'  business,  the  circumstances  being  such  as  to  bring  the  under- 
taking or  contract  within  the  scope  of  the  authority  of  the  partner,  who 
undertakes  or  contracts. (y)  Thus,  where  a  customer  of  A.  and  B.,  who 
were  in  partnership,  as  navy  agents,  employed  them  to  purchase  an 
annuity  fur  him;  but  A.,  unknown  to  15.,  guaranteed  the  punctual  pay- 
ment of  the  annuity :  it  was  held  that  B.  was  bound  by  the  engagement 
of  A.,  since  both  were  acquainted  with  the  fact  of  the  purchase  of  the 
annuity,  although  it  was  out  of  the  regular  course  of  the  business  of  the 
firm,  [g) 

It  has  long  been  understood  to  be  an  absolute  rule,  that  one  partner 
has  not  power  to  bind  the  partnership  by  deed,  in  the  absence  of  autho- 
rity^//] and  as  it  may,  and  does  sometimes  become  a  question,  in  cases  of 
deeds  of  composition  with  creditors,  and  other  cases,  how  far  a  deed, 
executed  by  one,  in  the  name  of  the  firm,  is  binding  on  the  partnership, 
it  maybe  desirable  to  remind  the  reader  of  several  points  relative  to  this 
question. 

1.  At  law,  the  above  rule  seems  to  remain  unshaken. 

2.  In  equity,  it  has  been  held  in  one  cast,  that  one  partner,  having 
always  authority  to  contract  by  simple  contract,  on  behalf  of  the  firm, 
may  so  contract,  that  the  firm  shall  execute  a  deed,  &c,  and  that  if  that 
one  execute  the  deed,  then,  though  the  other  partners  expressly  refuse, 
the  obligee  may  prove  in  bankruptcy  against  the  joint  estate,  (i) 
r*-">-"-|  *3.  Also  it  has  been  held  in  equity,  that  a  deed  commencing 
L  "  J  "Know  all,  &e.,  that  we,  Mayne  and  Co.,  of,  &c.,  are  held  and 
firmly  bound,"  &c. ;  and  of  which  the  condition  was  such,  "that  if  the 
above  bounden  Mayne  &  Co.,  their  heir-,  executors,  or  administrators, 
shall  and  rln  well  and  truly,"  <.Y.c.  ;  and  which  was  executed,  by  one  of 
the  firm  only,  but  he  executed  with  the  privity  of  the  other  partners, 
who  weir  all  present  at  the  execution, (/.-) — bound  the  partnership. 

(/)  v.  Layfield,  Balk.  292  :  Bee  I  Stark.  11.  88. 

(a)  Sandilande  \.  March,  2  B.  ,v  A.  B79j  Bee  Brettel  v.  Williams,  4  Exch.  C25; 
and  gee  3  B.  Ld 

(h)  Harrison  v.  Jackson,  1  T.  K.  207. 

(i)  Ex  parte  Bosanquet,  De  <i.  Hank.  R.  432. 

(k)  Hum  v.  Burn,  3  Ves.  573 :  Bee  I  Meriv.  720,  and  Jones  \ .  Mars,  2  Camp. 305. 
The  question,  whether  the  execution,  al  the  banking-house,  by  one  of  the  partners, 
thus,  •■  For  -'11'  and  partners,  B.  Q-,  Smith,"  there  being  no  ei  Ldence  of  any  express 
■  or  die  'Hi  of  the  rest  of  the  firm,  bound  the  firm,  the  deed  thus  executed 
being  a  deed  of  inspectorship  between  a  d<  btor  and  his  creditors,  so  as  to  operate 
charge  a  surely,  aro?e.  bul  m&  aol  de<  ided,  in  Smith  v.  Winter,  4  M.  &  W. 
454. 


PARTNERSHIPS    AT    COMMON    LAW.  223 

One  of  several  partners  in  a  banking  house  dies;  a  customer,  two 
months  after  the  death,  having  notice  thereof,  draws  a  cheque,  on  the 
house,  in  the  name  of  the  old  firm,  which  was  paid  to  the  bearer ;  no 
other  receipts  or  payments  took  place,  until  the  bankruptcy  of  the 
partnership,  nine  months  after  the  death,  under  which  the  customer 
proved  for  the  balance  remaining  due  to  her,  and  received  dividends 
thereon,  which*  reduced  the  debt  to  £21G;  the  question  was,  whether, 
for  this  amount,  the  deceased's  estate  was  liable. 

Now,  a  partnership  contract,  being  inform  only  joint,  is  held  to  pro- 
duce only  a  joint  obligation,  which  consequently  attaches  exclusively 
upon  the  survivors. (I)  By  the  mercantile  law,  that  is,  according  to  the 
prevalent  ideas  of  obligations  and  rights,  governing  the  commercial  law 
of  Europe,  a  partnership  contract  is  several  as  well  as  joint. (inj  As  to 
equity,  the  doctrine  laid  down  formerly  seems  to  have  been,  that  the 
creditors  of  the  firm  had  no  claim  against  the  estate  of  the  deceased 
partner,  except  when  the  surviving  partners  were,  at  the  time,  or  subse- 
quently ^became,  insolvent  or  bankrupt.  (»)  But  this  view  has  r#2Q«-i 
long  been  departed  from.  It  is  now  held  in  equity,  that  part-  L  "  J 
nership  debts  are  joint  and  several  ;(o)  and  in  a  suit  by  a  creditor  of  the 
firm,  against  the  representatives  of  a  deceased  partner,  and  the  surviving 
partner,  the  creditor  is  entitled  to  satisfaction  out  of  the  assets  of  the 
deceased  partner,  though  it  be  not  proved,  that  the  surviving  partner 
was  insolvent ;(o\  and  there  being  no  difference  in  principle,  between  a 
banking  partnership  at  common  law,  and  any  other  partnership,  and  no 
new  contract  arising  from  the  customer  leaving  the  money  in  the  bank, 
after  the  death,  the  customer  was  held  entitled  to  receive  the  balance 
above  mentioned,  from  the  deceased's  separate  estate. (?) 

Under  the  circumstances  already  mentioned,  it  was  laid  down  also, 
that  the  partnership  having  wrongfully  sold  some  exchequer  bills,  de- 
posited with  them,  in  the  lifetime  of  the  deceased  partner,  and  presuma- 
bly with  his  privity,  the  transactions  being  entered  in  the  books,  and  the 
death  of  the  partner  not  taking  place  until  five  months  afterwards,  and 
the  produce  being  applied  to  the  use  of  the  house,  the  amount  became 
a  partnership  debt,  accruing  from  the  moment  they  were  sold  without 
the  consent  of  the  creditor,  and  interest  was  allowed  at  hi.  per  cent., 
from  the  time  of  the  sale.  The  question,  whether  or  not  the  individual 
partners  were  privy  to  the  sale,  was  regarded  as  immaterial. (5) 

So  in  the  same  case,  it  was  held  that  creditors,  in  respect  of  stock, 
standing  in  the  partnership  name,  which  was  sold  in  breach  of  trust,  and 

(I)  Sleech's  case,  1  Meriv.  564;  Story,  Partnersh.  s.  361 ;  Richards  v.  Heather, 
1  B.  &  A.  29. 

(m)  Colly.  Partn.  404,  2nd  edit. ;  compare  cases,  n.  (I),  supra. 

(n)  Colly.  Partnersh.,  404-408,  2nd  edit. ;  Story,  Partnersh.  s.  362. 

(0)  Wilkinson  v.  Henderson,  1  My.  &  K.  581.  If  a  customer  has  dealt  with  a 
banking  house,  under  the  firm  of  J.  Teed,  T.  Teed  &  Co.,  then  J.  Teed  alone  can- 
not, at  law,  sue  for  a  balance,  though  T.  Teed  be  a  minor.  Teed  v.  Elworthy,  14 
East,  210. 

(q)  Clayton's  case,  1  Meriv.  579,  580  ;  see  Reg.  v.  Strahan,  supra,  148. 

February,  1857. — 16 


224  <i  R  A  N  T    ON     THE     LAW    OF    BANKING. 

tlu-  proceeds  applied  to  the  ose  of  the  house,  were  entitled  as  against  tin 
estate  of  the  deceased  partner,  either  to  regard  the  amount  as  a  debt,  or 

r*-?o-i  tn  have  :  t'"'  st«"'k  specifically  replaced,  at  their  option;  and  the 
L  ""  '-I  same  would  he  ruled  it' the  stuck  stood  in  the  name  of  one  part- 
ner only,  and  was  sold  by  him  only,  the  proceeds  going  as  hefore,  to  the 
use  of  the  house. (r) 

So  in  tin-  same  case,  it  was  held  that  exchequer  hills,  having  heen  de- 
posited  by  a  customer,  under  an  agreement  to  return  them,  or  other  hills 
in  lieu  of  them,  when  paid  off  by  the  government,  and  the  bills  were 
<o\d,  some  in  the  lifetime  of  the  deceased,  and  others  after  his  death,  the 
deceased's  estate  was  not  liable  in  respect  of  the  amount  of  the  latter 
debt.(N) 

A  lady  having  an  account  with  a  banking  house,  consisting  of  several 
partners,  was  advised  by  one  of  thejn  to  dispose  of  certain  Dutch  bonds, 
of  which  she  was  possessed,  and  to  place  the  proceeds  on  better  security; 
he  suggested  also  that  the  money  should  be  lent  to  his  son.  In  this  plan 
the  lady  acquiesced,  in  consequence  of  the  great  confidence  she  had  in 
the  firm,  and  gave  the  partner  a  cheque  upon  the  bank,  for  the  money, 
payable  to  a  third  person  named,  or  bearer,  and  received  a  promissory 
note  for  repayment,  with  a  guarantee  from  the  partner,  who  afterwards 
d'M-onded,  and  the  security  proved  worthless. 

On  the  lady  filing  a  bill  in  equity  againsl  the  remaining  partners,  it 
held  that   they  wore  not  liable   for  the   loss,  because   the  transaction 
was  not  within  the  scope  of  a  banker's  businesB,  and  was  not  recom- 
mended or  sanctioned  by  the  other  partners/*) 

In  the  following  case,  where  the  person  obtaining  the  money  was  sole 
manager,  not  partner,  a  court  of  law  decided  differently.  The  wife  of 
a  person  resident  abroad,  herself  resident  in  England,  had  a  "deposit 
account"  with  a  joint  stock  bank;  the  arrangement  being,  that  a  eusto- 
r*?Q«i  mer>  navinS  sucn  an  account,  never  drew  cheques,  but  the  bank 
L  -*  J  *gave  ><a  deposit  receipt,"  when  the  money  was  lodged,  and  the 
customer  might,  at  any  time  on  presenting  the  receipt,  with  his  name 
indorsed  on  it,  obtain  his  principal  ami  interest,  up  to  the  day  of  repay- 
ment. The  manager  represented  to  her,  that  the  bank  had  an  equitable 
mortgage  on  Borne  houses,  <V'-.,  subject  to  a  mortgage  for  4002.,  and  ad- 
.  ised  her  to  purchase  the  houses  for  5952. ;  4002.  to  be  paid  in  disci 

of  the  i tgage,    1952.  to  the  bank.      Eer  accounts  with   the  bank 

showed  7752.  in  her  favour  at  that  time.  <  Hit  of  this,  the  adviser  being 
manager  of  a  branch  hank,  where  none  of  the  members  of  the  company 
resided,  drew  oul  of  the  bank  5952.,  by  presenting  the  deposit  receipts 
indorsed,  \<-.,  ,-it  the  counter,  s  fresh  d<  i". -it  receipt  for  L802.,  the  bal- 
ance remaining  due  for  principal  and  interest,  being  handed  to  the  cus- 
tomer.    The  manager  absconded  with  the  money. 

When  the  customer  sued  the  bank,  although  it  was  urged  that  t  1  * I  - 
transaction  was  Dot  within  the  Boope  of  banking  business,  and  that  the 

»e,  l  Meriv.  611,  612.  Hoolton'e  case,  l  Meriv.  GI6. 

Bishop  v.  Countess  of  Jersey,  2  Drewry,  143  j  8.  C,  23  L.  J.,  Chanc.  483  ; 
I  bompson  v.  Bell,  in  Bxch.  11. 


PARTNERSHIPS    AT    COMMON    LAW.  225 

manager  was  not  authorized  to  sell  property  of  the  bank,  the  jury  found 
the  manager  to  have  intended  to  make  the  plaintiff  believe,  and  that  she 
did  believe  him  to  be  acting  as  agent  to  the  bank,  and  the  court,  there- 
fore, held  the  bank  to  be  responsible  for  the  money. (q) 

A  testator  was  member  of  a  partnership,  at  will,  in  a  bank ;  there 
being  no  provision  entitling  the  executor  of  a  deceased  partner  to  an 
interest  in  the  good -will  of  the  concern.  It  was  stated  that  the  credit, 
in  which  the  bank  was,  at  the  time  of  the  death,  was  so  good,  from  the 
well-known  wealth  of  its  members,  that  it  was  unnecessary  that  the  part- 
ners should  retain,  at  the  banking  house,  any  considerable  surplus  of 
assets,  above  the  liabilities;  and  in  fact  the  whole  assets  of  the  partner- 
ship, then  and  for  some  time  previously,  exceeded  the  liabilities  by  a 
small  amount.  The  bank  was  a  bank  of  issue,  as  well  as  of  deposit ;  and 
the  *profits  of  the  partnership  arose  from  the  employment,  at  in-  r*9ng-i 
terest,  by  way  of  loans,  to  customers,  on  overdrawn  accounts,  and  «-  -I 
otherwise,  and  investment  in  other  modes,  of  moneys  placed  in  their 
hands,  by  way  of  deposit,  and  of  the  amount  of  their  notes  in  circula- 
tion. 

Each  of  the  partners  was  entitled  to  one-third  of  the  assets  of  the 
partnership,  and  liable  to  the  payment  of  one-third  of  the  liabilities 
thereof. 

The  testator's  share  in  the  assets  at  his  death,  was  much  exceeded  by 
the  balance  of  his  account  as  a  customer  with  the  bank,  and  due  from 
him  to  the  concern.  After  his  death,  the  surviving  partners  admitted 
into  the  firm  his  son  and  executor ;  but  they  did  not  admit  him  as  exe- 
cutor, and  the  business  continued  to  be  carried  on  as  before  the  death, 
without  any  separation  or  appropriation  of  the  partnership  assets,  as  they 
stood  at  the  death. 

In  a  suit  against  the  executor  for  the  administration  of  the  testator's 
estate,  the  Court  of  Chancery  held  him  not  to  be  accountable  to  the  tes- 
tator's estate  for  the  profits  which  he  had  received  as  a  partner;  in  fact, 
deciding  that  the  good-will  in  the  bank,  placed  in  the  circumstances 
above  detailed,  having,  in  fact,  no  capital,  and  the  testator  having  died 
indebted  to  the  bank,  was  worth  nothing,  (r) 

After  the  testator's  death,  a  number  of  notes  of  the  old  firm  were  re- 
issued. By  the  notes  so  re-issued,  however,  it  is  not  to  be  assumed  that 
the  testator's  estate  would  have  been  bound ;  most  probably  it  would  not; 
on  the  other  hand,  it  is  probable  these  notes  obtained  currency,  in  some 
degree,  from  the  use  of  the  testator's  name  upon  them. 

The  case  was  said,  by  Lord  Justice  Turner,  to  involve  questions  of 
very  great  importance,  (which  the  court  on  that  occasion  were  not  called 
on  to  decide,)  as  to  what  is  to  *be  considered  as  capital  of  an  out-  i-^qq-i 
going  partner,  with  reference  to  a  banking  concern. (s) 

Partnerships  in  other  Firms. — A  question  sometimes  arises  when 
several  partnerships  are  carried  on  under  the  same  name,  but  having,  in 

(q)  Thompson  v.  Bell,  10  Exch.  11.  . 

\r)  Simpson  v.  Chapman,  4  De  G.  M.  &  G.  154 ;  the  delay  in  making  the  claim 
was,  in  some  degree,  relied  on  by  the  court, 
(s)  4  De  G.  M.  &  G.  169,  170. 


226  ('.RANT    ON    THE    LAW    OF    BAN  KIN  & 

•'ict.  separate  businesses  and  concerns  ;  and  bills  drawn  under  the  name 
of  the  firm,  common  to  them  all,  but  in  whioh,  for  sonic  of  the  purposes 
:ill  of  the  partners  of  the  Beyers]  partnerships  are  not  members,  arc  dis- 
oounted  by  the  bankers;  then  against  whom  are  the  bankers  to  proceed 
in  case  of  dishonour ''. 

Now,  if  a  linn  of  A.  &  Co.  trades  in  the  above  manner,  and  the  part- 
aership  name  and  style  or  firm  appears  pledged  to  a  bill,  all  the  partners, 
whoever  they  may  be,  and  whether  known  or  secret  partners,  will  be 
bound,  supposing  the  case  to  be  free  of  facts  operating  to  impeach  the 
title  of  the  party  who  seeks  to  charge  them.(£)  This  is  a  well-established 
law.  Bence,  where  a  bill  was  drawn  in  the  name  of  "  James  King  & 
Co.,"  and  an  indorsee  sued  on  it,  a  person  who  was  a  partner  in  that 
firm,  and  it  also  appeared  that  there  were  other  partnerships  carried  on 
under  the  firm  of  "  James  King  &  Co.,"  in  which  the  other  drawers  of 
the  bill  were  coucerned,  but  in  which  the  defendant  had  no  share  there; 
although  he  offered  to  show  the  bill  to  have  been  drawn,  not  on  account 
of  the  partnership  in  which  he  was  concerned,  but  on  account  of  one  of 
the  others,  and  that  he  knew  nothing  of  it,  he  was  considered  to  be  liable  on 
the  bill ;  for  he  had  traded  with  the  other  partners,  under  that  firm,  and 
persons  taking  bills  under  it  had  a  right  to  look  to  him  for  payment, 
although  they  had  taken  without  his  knowledge.  The  defendant  was  sued 
alone,  because  the  other  partners  had  become  bankrupt. (h) 
... ,  .  ,  liven  if  the  several  partnerships  do  not  trade,  generally,  *under 
J  one  name,  but  conduct  a  particular  business,  apart  from  their 
general  trade,  in  respect  of  which  they  negotiate  bills  under  one  name, 
which  is  that  of  one  of  the  firms  and  not  of  all  the  firms  collectively,  the 
jame  holds  good. 

Thus,  in  the  instance  of  a  Scotch  case,  which  was  finally  disposed  of 
in  the  Eouse  of  Lords.  Hugh  Mathie  &  Co.  carried  on  trade  as  a  part- 
nership at  Greenock.  Another  branch  of  trade  was  conducted  by  Mathie 
and  Fleming,  between  that  place  and  Nassau,  New  Providence;  Fleming 
having  no  share  in  the  partnership  of  II.  Mathie  &  Co.  The  Nassau 
trade  was  carried  on  at  (ireenock  by  Hugh  .Mathie  &  Co. ;  at  Nassau,  by 
one  Home;  and  at  London,  by  Fleming  A:  Co.  Mathie  kept  separate  ac- 
counts for  the  concern. 

Certain  bills  had  been  discounted  at  the  branch  of  the  Bank  of  Scot- 
land, in  Greenock,  subscribed  II.  Mathie  &  Co.,  and  no  explanation  was 
required  or  given  at  the  times  of  the  discounts. 

II.  Mathie  A:  Co.  failed,  and  the  agent  of  the  hank,  on  the  ground  of 
his  having  given  credit  to  Fleming,  as  included  in  the  firm,  made  his 
demand  on  Fleming.  A  proof  was  taken,  and  the  Court  of  Session  was 
satisfied  that  Fleming  was  not  a  general  partner  with  II.  Mathie  &  Co., 
hut  that  hills,  having  formerly  heen  discounted  under  that  firm  for  the 
ise  of  the  Nassau  concern,  and  sanctioned  by  Fleming,  a  credit  was 
raised,  entitling  bill-holders  to  rely  on  his  credit,  and  he  was  accordingly 
held  to  he  liable;   and  the  House  of  Lords  confirmed  the  general  princi- 

(t)   Bet  1  I'm.  <fc  J.  318. 

(w)  Baker  v.  Charlton,  1  Peakc,  111  ;  see  Ex  parte  Mayor,  De  G.  Bank.  R.  632. 


PARTNERSHIPS    AT    COMMON    LAW.  227 

pie  of  the  decision  ;  which  seems  to  be  that  where  several  partner- 
ships, consisting  of  different  individuals,  carry  on  business  under  the 
same  firm,  and  enter  into  negotiable  securities  under  the  same  signature, 
the  holder  of  such  securities  has  a  right  to  select  which  of  those  part- 
nerships he  chooses  for  his  debtors,  though  he  cannot  take  all  the  part- 
nerships as  his  debtors. (a:) 

*Two,  of  three  partners,  are  members  of  a  joint  stock  bank-  p0.9-, 
ing  company.  A  joint  fiat  in  bankruptcy  issues  against  their  L  "J 
firm,  which  is  jointly  indebted,  at  that  time,  to  the  banking  company ; 
which,  though  itself  insolvent,  was  held  entitled  to  prove  against  the 
joint  estate  of  the  three  partners  ;(#)  and  so  it  would  have  been  if  the 
firm  had  consisted  of  a  single  member  of  the  banking  copartnership.^) 

Two  of  the  partners,  carrying  on  business  as  the  Horseley  Coal  and 
Iron  Company,  also  carry  on  trade — distinctly  from  the  former — as 
bankers.  They  are  not  the  ordinary  bankers  of  the  company.  They 
lend  to  the  company  several  sums  of  money  at  interest,  without  security, 
under  circumstances  leading  to  the  inference,  that  the  advances  would 
not  have  been  made  unless  the  bankers  had  been  partners  in  the  com- 
pany. 

On  the  bankruptcy  of  the  company,  it  was  held  (in  the  absence  of  evi- 
dence, except  such  as  the  nature  of  the  transaction  itself  furnished,  to 
show  that  the  character  of  a  banking  transaction  belonged  to  it,)  that 
these  advances  were  not  made  by  the  bankers  in  their  character  of  bank- 
ers, and  were  not,  therefore,  dealings  between  trade  and  trade,  entitling 
them  to  prove  against  the  estate  of  the  company,  (a)  The  conclusion 
that  these  were  not  in  the  nature  of  banking  transactions,  does  not  rest 
on  their  unusual  and  improvident  character;  that  could  not  deprive  them 
of  the  nature  of  banking  transactions,  if  it  could  be  shown  aliunde,  that 
they  were  so. (a)  However,  it  cannot  be  said,  that  every  thing  which  a 
banker  does,  with  money  or  bills,  is  a  dealing  in  the  trade  of  a  banker, 
because  it  is  a  dealing  with  money ;  although  it  is  true  that  it  is  the  trade 
of  a  banker  to  deal  in  and  with  money. 

*Libel — Bankers,  in  partnership,  may  join  in  maintaining  an  pgQg-. 
action  for  a  libel  against  them,  in  respect  of  their  business,  and  L  J 
touching  their  credit,  without  disclosing  the  ratios,  or  shares,  in  which 
each  of  them  is  interested  in  the  concern ;  for  there  cannot  be,  it  would 
appear,  any  separate  damage;  the  business  injured  is  the  joint  business; 
and  the  libel  only  affects  the  partners  through  their  business ;  then  the 
defendant  has  nothing  to  do  with  their  respective  proportions  of  interest 
in  the  business ;  it  is  nothing  to  him  how  the  compensation  they  may 
recover,  will  be  divided  among  them. 

It  was  also  held,  that  to  say  of  a  banker  that  he  has  suspended  pay- 
ment, is  actionable;  for  it  is  saying  that  he  cannot  pay  his  debts;  and  a 


lx)  See  Colly.  Partnersh.  271,  272. 

(y)  Ex  parte  Law,  1  M.  D.  &  D.  G.  16. 

(2)  Ex  parte  Caldecott,  2  M.  D.  &  D.  G.  368. 

(a)  Ex  parte  Williams,  3  M.  D.  &  D.  G.  433,  446. 


•_;_>         URANT  ON  THE  LAW  OF  BANKING. 

temporary  inability  to  pay  debts,  is  insolveneyj  and  such  action  is  main- 
tainable, without  Betting  out  or  showing  special  damage. (6) 

Dissolution. — A  linn  of  partners  in  banking,  agree  to  dissolve;  and  a 

dc.d  i>  prepared  and  executed,  by  which  two  of  the  firm  retire,  and  the 
other  two  members  of  it  stay  in  the  business,  taking  the  concern  in  its 
actual  state,  and  covenanting  to  indemnify  the  retiring  partners  against 
all  liabilities.  The  dissolution  ami  retirement  of  the  partners  took  place 
a-  though  the  partnership  was  Bolvenl  ;  hut  in  law,  the  concern  itself  not 
equal, with  its  own  assets,  to  the  payment  of  its  own  engagements, 
the  partnership  was  insolvent  at  this  time,  although  the  partners  might 
have  separate  property  sufficient  to  pay  the  joint  debts,  and  the  retiring 
partners  must  be  taken  to  have  known  this;  but,  nevertheless,  either  of 
them  having  been  obliged  to  pay  debts,  whioh  the  continuing  partners 
had  indemnified  them  against,  would  be  entitled  to  prove  for  the  amount 
so  paid,  under  aflol  against  the  remaining  partners. (c) 
r*'^n_n  *  Change  of  firm. — We  may  mention  here  a  principle  of  the 
L  J  lawr  of  partnerships,  which  it  is  very  material  for  members  of 
banking  copartnerships,  at  common  law,  to  bear  in  mind,  in  order,  in 
case  of  a  change,  by  retirement  or  death,  in  the  firm,  that  the  position 
of  the  retiring  partners  may  be  properly  secured. 

The  principle  is  thus  laid  down.  If  a  creditor  receive  interest  from 
the  new  firm,  for  a  debt  due  from  the  old  one,  this  is  not,  necessarily  au 
adoption  by  him  of  the  new  firm,  as  his  sole  debtors. 

Thus,  if  the  change  be  occasioned  by  death,  and  the  creditor  of  the 
old  firm  receive-  interest  for  his  debt  from  the  new  firm,  it  is  quite 
char,  this  fact,  by  itself,  will  not  discharge  the  estate  of  the  deceased 
partner.!'/) 

If  the  change  be  occasioned  by  the  retirement  of  a  partner,  the  same 
holds  good.     The  following  case  is  an  instance  in  proof: — 

A  customer  of  a  bank,  consisting  of  three  partners,  has  a  considerable 
balance  in  his  favour,  for  which  he  holds  the  accountable  receipts  of  the 
firm.  Then  one  of  them  retires,  and  the  balance  of  the  customer's 
account  is  brought  forward  into  the  concerns  of  the  new  firm,  without, 
however,  consulting  the  customer;  but  he  knew  of  the  dissolution,  and 
continued  to  deposit  money  in  the  bank,  after  the  new  partnership  com- 
menccil  business;  for  which  new  deposits  he  had  the  accountable  receipts 
of  the  new  firm  sent  to  him  from  time  to  time;  and  each  time  that  a 
balance  was  struck,  the  interest  upon  the  whole  Bum,  as  well  that  part  of 
it  which  iras  deposited  before,  as  that  part  which  was  deposited  after  the 
new  partnership  began,  was  calculated,  as  npon  one  aggregate  sum  with- 
out distinction,  and  he  applied  for  and  received  at  various  times,  several 

Bums  of  BUch  interest  from  the  nen  firm,  calculated  as  just  mentioned. 
.  ..,,--.  Then  the  mw  firm  became  bankrupt  :  and  upon  the  customer 
L        J  suing  the  retired  partner,  for  the  amount  of  the  balance  due  at 

</,)  Eorster  v.  Lawson,  3  Bing.  452. 

(c)  i  I  ter,  Mont.  A  M'A.  1.     Evidenci  of  change  in  firm  of  In 

bank,  Bar!  v.  Alexander.  2  .M.  «v  W.  484. 

Daniel  v.  Cross,  to  account  by  representatives  of  deceased 

survivors,  Bee  Richardson  \.  Bank  of  England,  4  .My.  &  C.  1G5  ; 
Tonlmin  v.  Copland,  3  V   &  Col.  Exch 


PARTNERSHIPS    ATCOMMON    LAW.  229 

the  retirement,  these  circumstances  were  held  not  to  constitute  sufficient 
evidence  of  the  customer's  assent,  to  transfer  the  credit  from  the  old 
firm  to  the  new,  and  so  adopt,  as  his  debtors,  the  new  firm,  to  the  release 
and  discharge  of  the  old.(e) 

If,  upon  a  change  of  the  members,  the  balances  of  the  customers  of 
the  old  partnership  be  transferred  from  the  books  of  the  old  firm  to  those 
of  the  new  firm,  without  any  special  agreement  as  to  the -manner  in  which 
payments  made  by  the  customers  were  to  be  applied,  but  under  a  general 
understanding  amongst  themselves,  that  the  new  house  was  to  be  respon- 
sible for  the  debts  due  from  the  old  :  the  new  house  cannot  appropriate 
payments  made  by  customers  since  the  change,  in  their  own  favour,  but 
will  be  bound  to  apply  them  in  liquidation  of  the  balances  due  from  the 
old  firm.f/) 

When  a  partnership  is  dissolved  by  the  death  of  a  partner,  the 
accounts  of  the  partnership  may  be  taken  in  equity,  in  a  suit  by  the 
survivors  against  his  executors,  or  vice  versa ;  or  even  in  a  suit  against 
the  executors  by  the  separate  creditors  of  the  deceased. 

A.,  a  partner  in  a  banking-house,  and  also  in  business  separately  as  a 
trader,  dies,  and  in  a  suit  by  his  separate  creditors  against  his  executors, 
the  bankers  claimed  to  prove  the  balance  due  to  them  from  A. ;  and  they 
were  held  to  be  entitled  to  do  so,  although,  as  the  partnership  included 
A.,  they  could  not  have  sued  him  at  law,  in  his  separate  capacity;  and 
the  reason  is,  because,  when  an  account  is  decreed,  the  equitable  credit- 
ors have  a  right  to  be  satisfied,  *and  no  distribution  of  assets  r*QAp-i 
can  take  place,  until  the  accounts  of  all  the  creditors,  of  every  L  J 
description,  have  been  gone  into.(^) 

A  corresponding  principle  applies  also,  when  the  firm  is  changed  by 
admitting  new  partners :  and  in  such  case  also,  it  has  been  decided,  that 
if  a  banking  firm  make  payments  for  a  customer,  professedly,  and  as  far 
as  they  were  aware,  with  his  authority :  these  payments  being  made  to 
a  person  who  was  then  acting  as  the  customer's  solicitor;  but,  in  truth, 
these  payments  were  made  without  authority;  and  they  are  debited  to 
the  customer  in  his  account,  and  then  the  firm  takes  new  partners,  and 
the  balance  of  the  account  is  carried  forward  into  the  books  of  the  new 
firm,  but  the  old  account  is  not  closed,  nor  a  new  account  opened,  with 
the  new  firm  ; — the  new  firm  is  not  liable  to  the  customer  for  the  amount 
of  such  payments,  unless  there  have  been  an  agreement  between  the  two 
firms  and  the  customer,  that  the  new  firm  shall  take  upon  themselves  the 
actual  liabilities  of  the  old  firm.(/i) 

(e)  Gough  v.  Davies,  4  Price,  200.  The  retiring  partner  ought  to  have  ob- 
tained a  formal  release  from  the  customer;  see  also  6  Exch.  287,  and  15  M.  &  W. 
444. 

(/)  Toulmin  v.  Copland,  3  Y.  &  Col.  Exch.  625,  thus  applying  the  principle  of 
Clayton's  case  to  cash  accounts  between  partners  themselves.  S.  C,  7  Cla.  &  F. 
375.     This  was  a  case  of  navy  agents.  ^ 

(g)  Paynter  v.  Houston,  3  Meriv.  302  ;  see  Milford  v.  Milford,  M'Clel.  &  Y.  150. 
As  to  proof  of  partnership  between  bank  and  a  colliery,  5  Ves.  308,  309,  696 ;  5 
Hare,  388. 

(h)  Craufurd  v.  Cocks,  6  Exch.  287.  As  to  presuming  that  new  firm  adopt  debts 
of  old,  Ex  parte  Sandham,  4  Deac.  &  C.  818. 


230  (;  RANT    OX    THE    LAW    OF    I:  A  X  K  I  X  G. 

Firms  at  Oust&men, — With  respect  to  dealings  by  banks  with  part- 
nerships, as  customers,  it  seems  desirable  to  state  here  some  of  the  cases 

if  common  occurrence,  in  the  hopes  that  they  maybe  found  available  for 
the  guidance  of  banks  in  the  management  of  their  business. 

Ashby  and  Rowland  earn-  on  business  as  partners,  having  an  account 
with  a  bank  in  their  own  names.  They  then  take  one  Shaw  into  part- 
nership, without,  however,  giving  notice  to  the  bank,  or  altering  the  title 
of  their  account,  and  without  making  any  rest  in  the  account.  The 
transactions  at  the  banking-house  were  with  Rowland  personally.  The 
.  ...  _-,  bankers  never  had  notice  that  Shaw  had  been  or  was  a  *partner, 
L  J  until  the  dissolution  of  the  partnership,  when  notice,  signed  by 
Ashby  and  Shaw,  was  sent  them,  that  Rowland  having  withdrawn  from 
the  firm,  no  transaction  to  which  he  wa^  a  party,  could  be  recognized  by 
them.  Before  Shaw  became  partner,  Rowland  had  indorsed  a  bill  of 
exchange,  in  the  partnership  name  of  Ashby  &  Rowland,  to  the  bankers, 
who  discounted  it,  and  placed  it  to  the  credit  of  the  account.  After 
Shaw  became  partner,  and  before  the  dissolution,  Rowland  indorsed  two 
other  bills  in  a  similar  manner,  which  were  discounted,  &c,  as  before. 
The  balance  of  the  account  at  the  time  of  the  dissolution,  was  £60  5s. 
•'!</..  against  the  partnership.  The  proceeds  of  all  the  three  bills  were 
intended  to  be  devoted  by  Rowland  to  other  than  partnership  purposes, 
but  of  this  the  bankers  had  no  knowledge,  and  nothing  appeared  that 
could  have  raised  their  suspicions  of  it.  The  question  was,  how  far 
Shaw  was  liable  to  the  bankers  on  these  bills,  and  it  was  decided  that 
he  was  not  liable  on  the  bill,  which  was  indorsed  and  discounted  before 
he  came  into  the  firm,  but  he  was  liable  on  the  two  other  bills;  for  it 
trae  Enid  that  each  partner  might  have  limited  the  authority  of  his  co- 
partners to  bind  him,  by  giving  notice  to  the  bankers;  he  was  also  held 
liable  upon  so  much  of  the  cash  balance  as  became  due  after  the  day  on 
which  he  became  a  partner.^') 

A  firm  of  partners  agree  that  one  of  the  partners  shall  retire,  the  as- 
sets being  transferred  to  the  continuing  partners,  who  shall  take  upon 
themselves  the  liabilities,  and  that  the  bankers  of  the  firm,  (whose  ac- 
count is  overdrawn,)  shall  release  the  retiring  partner.  The  bankers 
sign  a  memorandum,  acceding  to  this  arrangement.  They  cannot  after- 
wards make  the  retiring  partner  a  bankrupt,  on  the  ground  of  this  debt; 
for  the  partner  having,  by  the  agreement,  to  which  the  bankers  were 
parties,  been  induced  to  give  up  his  share  in  the  partnership  property, 
and  to  denude  himself  of  the  means  of  payment  of  the  debt,  it  is  contrary 
I  *3081  ""  ('l"'t.v  tMat  ''"A'  *should  be  allowed  to  proceed  as  if  they  had 
J  never  caused  him  bo  to  act;  and  they  will  be  restrained,  by  in- 
junction, from  so  proceeding.  (&) 

One  of*  two  partners  draw-  bills  of  exchange,  in  his  own  name,  which 
he  gets  discounted  by  a  banker,  through  the  same  agent  who  obtained 
Prom  the  banker  the  discount  of  other  bills  drawn  in  the  partnership 
firm.  The  banker  made  no  distinction  between  the  bills,  conceiving  they 
irere  all  drawn  on   the  partnership  account.     The  partners  resided  at 

(i'j  V.rr-  v.  A-hl.y.  10  B.  &  C.  288.      (k)   Attwood  v.  Banks,  2  Beav.  192. 


PARTNERSHIPS    AT    COMMON    LAW.  231 

Warminster,  the  banker  carried  on  business  at  Salisbury,  and  was  not 
acquainted  with  them.  The  proceeds  were  remitted,  by  the  above-men- 
tioned agent,  and  paid  to  the  partnership  account,  and  applied  to  the 
partnership  use.  But  this  circumstance  was  held  to  make  no  difference; 
the  only  party  liable,  for  the  bills,  drawn  by  the  one  partner,  was  that 
partner;  the  bills,  considering  the  transaction  as  a  discount,  were  his 
only ;  the  partners,  as  such,  had  never  said  or  done  anything  to  induce 
the  banker  to  believe  it  to  be  a  partnership  concern,  and  to  lend  his  mo- 
ney on  that  account ;  and,  in  the  absence  of  any  express  contract  be- 
tween the  parties,  it  was  treated  as  a  mere  discount  of  the  bills ;  the 
money  advanced  being  advanced  solely  on  the  security  of  the  parties 
whose  names  were  on  the  bills,  and  as  a  matter  of  discount,  not  as  a  loan, 
to  the  partnership.  The  banker  never  considered  himself  as  lending 
money  to  them  on  the  security  of  the  bills,  as  he  had  never  made  any 
entry  in  his  books,  charging  them  as  his  debtors.  His  discounting  the 
bills  amounted,  therefore,  to  a  purchase  of  them.(?) 

If  a  single  joint  speculation  be  set  on  foot,  between  A.,  B.  and  C, 
who  are  not  general  partners,  and  each  is  to  contribute  his  third  part, 
not  of  the  capital,  for  no  joint  fund  is  raised  for  the  speculation,  but  of 
the  expenses ;  and  A.  was  always  ready  with  his  advances,  and  paid  his 
proportions  when  called  upon,  A.  is  not  liable  to  the  bankers  *of  r*qncn 
B.,  (who  were  also  the  bankers  of  the  joint  speculation,)  for  mo-  L  J 
neys  advanced  by  them  on  the  individual  credit  of  B.,  without  the 
knowledge  of  A.,  though  such  moneys  were  applied,  in  payment  of  bills 
accepted,  payable  at  the  house  of  their  London  correspondents,  and  drawn 
upon  B.,  in  the  course  of  the  transactions  belonging  to  the  joint  specu- 
lation. (iti\ 

In  cases  like  this,  the  bankers,  when  the  real  relation  between  the 
parties  is  known  to  them,  (which  was  not  the  case  in  the  above  instance,) 
ought,  for  their  own  security,  to  ascertain,  and  to  be  satisfied,  that,  in 
paying  bills,  &c,  they  are  advancing  money,  not  only  for  the  use  of  all, 
but  also  with  the  knowledge,  and  at  the  instance  of  all,  otherwise  all 
will  not  be  liable  to  repay  the  money;  for  the  bankers  will  not  be  able 
to  represent  themselves  as  having  been  deluded,  by  the  prospect  of  hav- 
ing a  joint,  or  partnership  security;  nor  will  they  be  able  to  say,  "we 
relieved  you  from  a  liability,  by  the  payments  we  made,  and  have,  there- 
fore, a  right  to  look  to  you  for  repayment ;"  for  one  person  cannot  pay 
the  debt  of  another,  and  by  that  means  make  the  other  his  debtor,  un- 
less the  payment  be  made  at  the  request  of  the  other,  (m) 

Articles  of  partnership  were  entered  into  between  A.,  and  three  other 
persons,  by  which  A.  had  power,  if  he  died  before  the  termination  of  the 
partnership,  to  bequeath  a  part  of  his  share  to  one  of  his  sons,  &c.  A. 
died,  having  bequeathed  this  part  to  such  of  his  sons  as  his  wife  should 
appoint,  and  making  his  wife,  and  two  of  the  partners,  executors. 

During  A.'s  lifetime,  the  partnership  borrowed  money  of  their  bank- 
ers, and  deposited,  as  security,  the  title  deeds  of  real  estate  belonging  to 

f 

(I)  Emly  v.  Lye,  15  East,  1,  11,  13. 
(»n)  Smith  v.  Craven,  1  Cro.  &  J.,  500. 


..KANT    ON    TUt    LAW    uF    BAN  KIN... 
the  partnership.      At   A.'.-  .Lath,  a    large   amount  was  due  to  the   bank  : 

\  ,'fi  sons  were  minora;  tike  banking  account  was  continued  without  alter- 

atioo  ;   A.'-  capital  was  continued  in  the  concern  of  the  partnership, 

., .   ..  which  sometime  afterwards  became  bankrupt,  being  greatly    in 

-I  advance  with  the  bank.     However,  the  amount  which  they  had 

paid  in.  since  A."s  death,  exceeded  the  sum  due  to  the  bank,  from  A.  and 
his  partners,  at  that  time,  and  it  was  considered,  therefore,  to  be  clear, 
that  this  discharged  tbe  lien,  of  the  bank,  on  the  estate  of  the  firm  above 
mentioned,  and  operated  as  payment  of  the  balance,  due  to  them,  at  the 
death  of  A..,  against  whose  estate,  therefore,  they  retained  no  claim  what* 
ever.(n)  The  effect  of  the  arrangement  entered  into,  at  A.'s  death,  by 
the  surviving  partner  and  the  bank,  being  interpreted  to  be,  that  the  ac- 
count should  go  on,  as  it  had  gone  on  before,  not  between  the  bank  and 
the  surviving  partners,  but  between  the  bank  and  the  new  firm  :  the  re- 
sult was,  the  bank  took  the  new  firm  as  their  debtors,  and  the  new  firm 
had  paid  off  and  discharged,  the  whole  of  the  debt,  that  was  due  by 
A.M 

Where  a  partnership  keep  an  account  with  a  banker,  and  a  new  part- 
ner comes  into  the  firm,  he  cannot  transfer,  a  part  of  the  assets  of  the 
old  firm,  to  his  separate  account,  without  the  authority  of  the  firm,  so  as 
to  discharge  the  banker.(o) 

A  partnership,  consisting  of  A.  and  B.,  trading  under  that  name  and 
style,  is  largely  indebted  to  their  bankers;  13.  dies,  and  A.  continues  the 
business,  under  the  same  name  and  style,  and  afterwards  indorses  seve- 
ral bills  of  exchange  to  the  bankers,  in  the  partnership  name  and  style  ; 
A.  then  becomes  bankrupt  :  the  bankers  were  allowed  to  prove  for  the 
amount  of  these  bills,  against  the  separate  estate  of  A.,  notwithstanding 
it  was  urged,  that  the  circumstances  furnished  an  inference,  that  the  bills 
were  indorsed,  in  respect  of  a  partnership  transaction^//) 

Another  partnership,  consisting  of  two  persons,  Cross  and  Cheshire, 
had  a  joint  account,  with  their  banker,  in  the  partnership  name  ;  Che- 
shire had  also  a  private  account  with  him.  In  December,  184(3,  the 
r^qii-i  banker  applied  to  Cheshire  *for  268c.,  as  being  the  amount  of 
L  '  J  the  balance  against  the  firm :  Cheshire  wrote,  in  reply,  Baying 
that  the  balance  arose  from  a  debt  of  his  own,  and  had  nothing  to  do 
with  the  partnership  account.  In  October,  184/,  Cheshire  gave  the 
banker,  a  promissory  note  for  the  above  sum,  being  the  balanoe  still  due. 
This  note  having  been  dishonoured,  and  Cheshire  having  become  bank- 
rupt, the  bunker  sued  Gross,  who  was  compelled  tO  pay  the  amount. 
Cross  was  held  to  1"-  entitled  to  sue  Cheshire,  for  this  sum,  as  money 
paid  to  Cheshire/*  use;  the  jury  having  Pound  the  debt,  tor  which  the 
promissory  note  wb&  given  to  be  bis  own,  and  ool  to  be  connected  with 
the  partnership  aooounlp.fo) 

The  t':iet  of  one  of  two  partners  having  opened  an  account  with  a  bank, 

v.  D(  rham,  8  Jn  Bani  of  Scotland  \ .  Chi  i 

214. 

B   nson,  L8  V. ■-.  231. 
parte  Wilson,  3  If.  D  A  D.  6.  57. 
(ij)  Croat  v.  Cheshire,  ~  Bxch.  43  j  Bee  5  Bzch.  489. 


PARTNERSHIPS    AT    COMMON    LAW.  233 

in  his  own  name,  is  not  conclusive,  to  show  the  account  to  be  opened, 
in  his  own  behalf  merely.  The  banker  may  prove  that  the  customer  was 
acting  as  agent  of  the  partnership,  and  that  the  account  was  a  partner- 
ship account.  On  the  other  hand,  the  mere  circumstance  of  the  money 
deposited,  being  partnership  money,  is  not  sufficient  to  prove  the  account 
to  be  a  partnership  account.  (r\ 

The  fact  of  one  of  many  co-adventurers,  in  a  mining  concern,  who  has 
assumed  the  management  of  the  adventure,  opening  an  account  with  a 
bank  in  the  name  of  the  adventurers,  does  not  show  that  he  is  expressly 
authorized  by  them  to  do  so;  and  as  there  is  in  general,  no  implied 
authority  in  mining  adventures,  by  which  any  one  of  them  may  pledge 
the  credit  of  the  rest,  for  money  borrowed,  although  for  the  purposes  of 
the  mine ;  if  the  account  is  overdrawn,  the  bankers  have  no  remedy  for 
the  balance,  by  way  of  action  against  the  co-adventurers. (s) 

*A.  and  B.,  partners  in  trade,  keep  a  joint  account  with  a  r*q-|9-i 
bank,  B.  having  also  a  separate  account  with  them.  The  part-  *-  -1 
nership  having  overdrawn  their  account,  B.  dies,  and  A.,  as  surviving 
partner,  becomes  bankrupt :  at  the  time  of  B.'s  death,  the  account  against 
the  partnership  was  15,000?.,  but  B.'s  private  account  gave  a  balance  of 
400?.  in  his  favour.  It  was  held  that  the  bankers  had  a  right  in  equity, 
to  go  immediately  on  the  separate  estate  of  B.,  but  they  had  not  the 
right  to  retain  against  the  executors,  who  had  commenced  an  action 
against  them,  to  recover  the  balance  due  to  B.'s  separate  estate.^) 

A  firm  of  two  partners  have  an  account  with  a  bank,  which  shows  a 
balance  in  their  favour  at  the  time  of  the  death  of  one.  Then  the  sur- 
vivor draws  out  a  portion  of  the  sum  owing  to  the  firm,  placing  it  in  the 
hands  of  trustees,  for  the  completion  of  a  previous  arrangement  entered 
into  for  partnership  purposes,  upon  the  understanding,  that  if  the  arrange- 
ment went  off,  the  money  should  be  returned  ;  the  arrangement  does  go 
off,  and  the  surviving  partner  becomes  bankrupt,  the  money  still  remain- 
ing in  the  hands  of  the  trustees.  It  is  part  of  the  joint  estate  of  the 
two  partners,  not  of  the  separate  estate  of  the  survivor.  This  case  illus- 
trates, if  illustration  be  needed,  the  relation  of  the  bankers  of  a  firm  to 
the  surviving  partners;  money  due  to  the  firm,  in  the  bankers'  hands,  is 
the  money  not  of  the  survivor  alone,  or  of  the  survivors  jointly,  if  there 
are  more  than  two  partners  in  the  original  firm,  but  of  the  survivor,  and 
the  representatives  of  the  deceased  partner. (uj 

Such  are  the  relations  of  the  representatives  of  a  deceased  partner,  in 
a  firm  employing  the  bank,  to  the  banking  house. 

It  is  always  essential  for  the  bankers,  to  ascertain  who  are  the  true 
members  of  the  firm,  to  whom  they  give  credit,  and  to  be  able  to  show, 
either  that  there  is  an  actual  partnership  subsisting  between  any  body, 

(?•)  Cooke  v.  Seeley,  2  Exch.  746.  See  effect  of  pass  book  as  evidence,  Robey 
v.  Howard,  2  Stark.  R.  555. 

(s)  Rickett  v.  Bennett,  4  C.  B.  686.  The  course  of  dealing,  and  the  nature  of 
the  concern,  were  left  to  the  jury,  to  consider  whether  they  afforded  grounds  for 
implying  authority,  in  the  managing  adventurer,  to  borrow,  &c. 

(t)  Stephenson  v.  Chiswell,  3  Ves.  566. 

(w)  Ex  parte  Leaf,  4  Deac.  287. 


234         GRANT  ON  TUE  LAW  OF  BANKING. 

poio-i  or  number  of  persons  to  whom  *they  have  given  joint  credit,  or 
L  -I  that  the  parties  held  themselves  out  aa  being  in  partnership,  or 
jointly  responsible  as  partner^ 

A  ,>;,-,. — la  case  of  a  joint-stock  banking  company,  the  fact  of  one  of 
the  directors  of  the  company  being  one  of  a  firm  dealing  with  the  bank, 
is  not  notice  actual  or  constructive  to  the  bank,  of  a  change  in  the  firm, 
by  retirement  of  one  member.  In  case  the  bank  had  been  an  ordinary 
partnership,  it  would  have  been  otherwise.(y) 

There  may  be  cases  in  which  bankers  may  safely,  perhaps,  make  ad- 
vances to  the  directors  of  a  joint-stock  company,  on  their  personal  guar- 
antee, who  have  by  the  constitution  of  the  company,  no  power  to  borrow  ; 
namely,  where  the  money  is  advanced,  not  for  the  payment  of  debts  of 
the  company,  but  for  the  purpose  of  carrying  on  the  business  of  the 
company  in  its  ordinary  course;  for  in  such  case,  although  the  advances 
do  not  constitute  a  debt  due  from  the  company  to  the  bankers,  yet  the 
directors,  being  trustees,  and  in  that  character  entitled  to  indemnity, 
from  their  cestuis  que  trustent,  against  expenses  bona  fide  incurred,  will 
be  allowed  for  such  expenses,  on  winding  up  the  affairs. (z\ 


[*314]  CHAPTER   XL 

BANKRUPTCY. 

BANKERS  arc  found  to  be  concerned  in  so  many  cases  of  bankruptcy 
of  customers,  as  to  make  it  appear  expedient  to  collect  the  law  and  deci- 
sions thereon,  so  as  to  present  the  whole  in  a  form  and  arrangement, 
which  it  is  hoped  may  prove  useful,  to  those  who  are  called  upon  to  ad- 
vice with  bankers,  in  these  emergencies. 

By  the  Bankrupt  Law  Consolidation  Act,  12  &  13  Vict,  c  10G,  s.  65, 
bankers  are  expressly  declared  to  be  traders  liable  to  the  bankrupt  laws. 

Bankruptcy  of  Bankers  as  such. — All  persons,  it  would  appear,  are 
to  be  deemed  bankers,  who  act  as  such,  although  they  may  not  keep 
banking  houses  ;(</)  such  are  army  and  navy  agents. 

A  member  of  a  joint-stock  banking  copartnership,  is  a  trader  Bubjeci 
to  the  bankrupt  laws,  when  his  holding  of  shares  is  bona  fide,  with  a 
view  to  profit  ;(6)  but  to  purchase  shares  for  the  mere  object  of  obtain- 
ing the  benefit  of  the  bankrupt  laws,  will  be  Ineffectual ;  for  the  holding  of 

(x)  Potl  v.  Kvton,  3  C.  B.  32. 

(>/)  Powl  3  0.  B.  i'::  BeeJacaud  v.  French,  L2  East,  ::17:  and 

If.  .m  Gra.  607, 

irte  Chippendale,  i  De  Q.  If.  .v  <;.  L9. 
(a)  ]•:■..  parte  Wilson,  1  Atk.  218;   Bee  2  Bo  <-,  210,  211,  and  Cowp.  747,  750, 
751. 

K\  parte  Wyndham,  l  If.  D.  &  De  G.  146  ;  Bi  parte  Hall,  :i  Dcac.  405 
parte  Lewis,  i  If.  D.  <fc  De  G.  371. 


BANKRUPTCY.  235 

them  under  such  circumstances,  is  settled  not  to  be  a  sufficient  trading 
to  support  a  fiat. (c^ 

A  banker  who  has  ceased  to  trade  as  such,  cannot  it  seems,  sue  out  a 
fiat  against  himself,  unless  he  owes  a  debt  Contracted  during  .-^-i  r-, 
the  trading,  which  would  support  a  creditor's  fiat.(d)  L         J 

With  respect  to  what  is  a  sufficient  absenting  from  the  banking  house, 
to  constitute  an  act  of  bankruptcy,  in  a  case  of  a  bank  in  which  there 
were  three  partners,  and  one  of  the  partners  who  resided  on  the  spot, 
and  was  the  only  partner  who  transacted  the  business,  the  others  residing 
at  a  distance,  absented  himself  from  the  banking  house,  shut  it  up  and 
stopped  payment,  it  was  held  this  was  not  evidence  of  a  joint  act  of  bank- 
ruptcy by  all  three,  (e) 

With  respect  to  acts  of  bankruptcy  arising  on  sales  of  property,  the 
rule  seems  to  be  taken  now  to  be,  that  a  trader  may  sell  his  stock  in 
trade  or  other  property,  without  such  sale  being  taken  as  an  act  of  bank- 
ruptcy, provided  the  object  and  effect  is  to  enable  him  to  carry  on  his 
trade  :  on  an  emergency,  he  may  sell  all  his  property  for  that  object; 
and  this  a  bank  on  which  there  is  a  run  may  do.(/) 

Where  bankers  go  on  receiving  deposits  and  issuing  notes,  after  they 
are  aware  that  their  affairs  are  in  a  state  of  utter,  hopeless  insolvency, 
they  will  be  refused  a  certificate  on  their  bankruptcy  though  the  court, 
on  the  consent  of  the  assignees  and  opposing  creditors,  may  grant  them 
protection;  but  whether  such  protection  is  of  any  avail  against  the 
common  law  rights  of  creditors,  who  do  not  come  in  under  the  bank- 
ruptcy, seems  very  questionable,^)  and  certainly  it  is  of  no  avail  what- 
ever against  creditors,  whose  debts  were  not  provable  under  the  com- 
mission, (fij 

Evidence  of  Dishonest  Dealings. — It  appears  to  be  assumed,  that  the 
failure  of  a  banker  is  of  itself,  evidence  that  he  has  been  acting  dis- 
honestly. The  customers  of  a  banker  *have  a  right  to  look  to  r*oig-i 
him,  for  the  exercise  of  cautiousness  and  circumspection,  for  L  J 
undeviating  adherence  to  the  purest  good  faith  and  strictest  integrity, 
in  the  use  of  their  money,  which  they  have  lent  him  as  a  banker ;  they 
have  a  right  to  expect  that  he  will  confine  his  trade  to  its  legitimate 
field;  viz.,  of  discounting  bills  and  purchasing,  or  advancing  money  upon 
proper  securities. 

But,  allowing  a  partner  without  giving  security,  greatly  to  overdraw 
his  private  account  with  the  bank ;  especially  if  such  partner  is  a  manag- 
ing partner ;  permitting  unnecessary  litigation,  and  charging  the  expenses 
to  the  assets  of  the  bank  ;  wrongful  dealing  by  way  of  transfer,  pledge, 
or  any  kind  of  conversion  with  a  customer's  short  bill  or  other  security; 
failure  to  keep  a  profit  and  loss  account ;  are  elements  of  consideration 

(c)  Ex  parte  Wyndham,  1  M.  D.  &  De  G.  149  ;  Ex  parte  Atkinson,  id.  300 ;  and 
see  Ex  parte  Brown,  2  id.  758. 

(d)  Ex  parte  Mitchell,  De  G.  Bank.  R.  257. 

(e)  Mills  v.  Bennett,  2  Rose,  269;  S.  C,  2  M.  &  Selw.  566. 
(/)  See  per  Erie,  J.,  Bittleston  v.  Cooke,  25  L.  J.,  Q.  B.  289. 

(g)  Ex  parte  Rufford,  21  L.  J.,  Bank.  Cas.  32 ;  S.  C,  2  De  G.  M.  &  G.  234. 
(h)  Grave  v.  Bishop,  25  L.  J.,  Exch.  58. 


230  GRANT    ON    THE    LAW    OF    BANKING. 

fox  a  ooart  of  bankruptcy,  on  the  question  whether  a  certificate  shall  be 
granted  ;  and  if  many  of  these  circumstances  concur,  they  will  certainly 
refuse  the  certificate. (/) 

Proving  against  Bankers  in  Bankruptcy. — As  to  questions  of  what 
parties,  and  in  what  capacities,  are  entitled  to  prove  against  bankers  mi 
their  bankruptcy,  some  few  point-  may  be  stated,  by  way  of  endeavour- 
ni'_r  rather  to  Bhow  the  view  which  the  courts  have  taken,  with  reference 
to  the  particular  circumstances,  than  to  extract  any  rule  upon  the  subject. 

If  a  lather,  who  is  one  of  a  banking  firm,  from  time  to  time  transfer 
Bams  of  money  to  the  credit  of  a  son,  who  lias  an  account  with  the  bank, 
and  do  this  uuder  circumstances,  excluding  the  idea  of  contemplated 
bankruptcy  having  been  the  motive  for  his  conduct,  the  sou  may  prove 
r+Ql-H  for  the  amount  ^standing  iu  his  account  to  his  credit,  at  the  time 
L         J  of  the  bankruptcy  of  the  nriu.(7.) 

A  banker  in  London,  has  branch  banks  in  Edinburgh,  and  other 
places;  his  branch  bank  of  deposit  at  Edinburgh,  is  managed  by  an 
agent,  Blyth;  the  banker  stops  payment,  and  the  same  day  sends  letters 
by  post  to  Blyth,  and  his  other  agents,  informing  them  of  the  fact,  and 
directing  them  to  discontinue  business.  Before  the  letter,  or  other  notice 
of  the  bankers  having  stopped  payment  reaches  Blyth,  a  customer  pays 
to  Blyth,  three  bank  notes  of  an  Edinburgh  bank,  for  100/.  each,  live 
promissory  notes  of  another  banking  company,  and  some  silver ;  in  all 
305Z.,  for  the  purpose  of  having  the  amount  remitted  to  London,  to  be 
paid  to  the  banker,  to  the  order  of  the  Edinburgh  customer;  but,  after 
the  news  reaches  Edinburgh,  and  whilst  the  notes  are  still  in  Blyth's 
possession,  gives  Blyth  notice  not  to  part  with  them,  and  they  remain  in 

his  hand-  when  the  fiat  issues  against  the  banker.  Blyth  had  a  lien  on 
the  funds  in  his  hands,  and  the  assignees  allowed  him  to  retain  tin' above 
-mil  in  pari  satisfaction  of  it;  but  they  were  obliged  to  refund  the 
amount  to  the  custouier.(7j 

A  partner  in  a  bank  drew  out  part  of  a  balance,  standing  to  the  account 
of  trustees  of  a  will,  under  which  he  was  interested,  without  the  autho- 
rity of  the  trustees,  and  invested  it  upon  a  canal  mortgage,  which  was  an 
unauthorized  Beeurity.(m)  On  the  bankruptcy  of  the  bankers,  the  a  stuit 
,j,i,  trustent  were  held  to  be  entitled  to  prove  for  the  whole  of  the  balance, 
without  giving  up  the  canal  mortgage,  (n) 

A.  was  co-partner  with  15.,  C.  and  l>.,  in  a  banking  firm,  and  waa 
partner  in  another  banking  firm,  with  \>  and  ('.  ;  then  A.  dies,  and  E, 
r*Qi<»n  is  admitted  a  partner  in  the  first-mentioned  bank-  only.  Each 
L  "  J  firm  becomes  bankrupt,  and  by  an  order  of  the  court,  the  estates 
of  the  two  firms  are  consolidated.     A  pi  rson  who  had  Income  a  creditor 

(i)  Be  St.  Albans  I'.ank.  l  Fonbl.  Bank.  R.  -i.     On  appeal,  the  refusal  of  certi- 
• .  .'.  at  confirmed,  on  the  ground  oi  the  misconduct,  as  to  pledging 
.uit  I  ii  II.  wit  linn  i  o  the  othei  parts  of  the  case.     Eta  part  Start,  4  De 

I  De  Q.  M.  4  G.  241. 
i7.-j  Ei  parte  Skerratt,  2  B 

i/i  Ei  parte  Cunningham,  3  M.  D.  &  De  G.  58;  Ex  parte  Solomons,  id.  T7 ;  El 
W'vlii-.  id.  82  :  Kx  parte  Belcher,  Id.  B7,  confirming  Ex  parte  Cunningham. 
De  G.  If.  a.  G.  218;  See  Be  Bankhead,  2  Kay  &  J.  560. 
(a)  Kx  parte  Biddulph,  3  De  G.  &  S.  5H7. 


BANKRUPTCY.  237 

of  the  first-mentioned  bank,  in  A.'s  lifetime,  received  a  dividend  out  of 
the  consolidated  estate;  but,  that  was  held  not  to  have  released  A.'? 
estate. (o) 

At  the  time  of  the  bankruptcy  of  S.  &  Co.,  bankers,  in  London,  one 
Harrison  had  an  account  with  them.  The  commission  issued  against 
the  bankers  on  21st  December,  1825.  Some  time  before  the  5th  Decem- 
ber, 1825,  one  Hippins  had  been  induced  to  accept,  for  the  accommoda- 
tion of  Harrison,  two  bills  of  exchange,  drawn  by  Harrison  on  Hippins, 
in  favour  of  Harrison;  one  of  these  was  dated  22nd  October,  1825, 
payable  at  four  months ;  the  other  dated  1st  November,  1825,  payable 
at  four  months ;  both  were  indorsed  by  Harrison,  on  5th  December, 
1825,  and  on  that  day  he  discounted  them,  together  with  three  other 
bills  of  exchange,  making  in  the  whole,  the  sum  of  2,907?.  8s.  4d.,  with 
S.  &  Co.,  and  the  amount  of  the  whole  number  of  bills  was  carried  to 
the  credit  of  Harrison  in  his  account,  and  he  was  debited  with  the 
discount  thereof.  Between  that  day  and  the  bankruptcy,  Harrison  drew 
out  considerable  sums  by  cheques.  The  three  last-mentioned  bills  had 
been  negotiated  by  the  bankers,  previously  to  the  bankruptcy,  the  two 
others  remaining  in  the  possession  of  the  bankers  at  the  time  of  the 
bankruptcy,  at  which  time,  also,  there  was  a  cash  balance  due  from  them 
to  Harrison,  to  the  amount  of  1,500?. ;  after  the  commission,  Harrison 
paid  the  three  bills  above  mentioned. 

The  assignees  of  S.  &  Co.  claimed  to  be  entitled  to  sue  Hippins  on 
the  two  bills,  and  to  negotiate  the  same ;  but  the  bills  were  ordered  to 
be  delivered  up  to  Harrison,  in  part  discharge  of  the  cash  balance,  with 
liberty  to  prove  for  the  difference  against  the  estate.  The  assignees, 
it  was  considered  could  not  be  allowed  to  proceed  against  Hip-  r^g-i 
pins,  *who  was  in  effect  a  surety,  for  the  purpose  of  defeating  L 
the  right  of  set-off,  which  Harrison,  the  principal  would  have  had,  if 
the  action  had  been  against  him.(^) 

The  following  case  may,  perhaps,  not  unfitly,  obtain  a  place  here,  in 
illustration  of  the  effect  of  the  bankruptcy  of  bankers  upon  the  relations 
of  their  customers  :— A.  buys  goods  of  B.,  and,  both  having  accounts 
with  the  banking-house  of  Caldwell  &  Co.,  of  Liverpool,  gives  him,  in 
payment,  an  order  on  Caldwells,  dated  7th  February,  1793,  directing 
them,  two  months  after  date,  to  give  to  B.  a  bill  of  exchange,  at  two 
months,  for  the  price  of  the  goods ;  which  order  was  indorsed  by  B.,  and 
paid  by  him  into  Caldwells,  who  entered  it  short  in  B.'s  account.  The 
general  course  of  business  between  Caldwells  and  most  of  their  customers, 
was  to  settle  accounts  on  certain  quarterly  days.  When  they  advanced 
bills  for  the  accommodation  of  their  customers,  or  received  bills  for  them, 
the  course  was,  to  enter  the  whole  amount  in  the  bank  books  as  bills ; 
but  on  the  quarterly  days  Caldwells  debited  his  customers  with  the  whole 
amount  of  the  bills  advanced  to  or  for  them,  crediting  them,  at  the  same 
time,  for  interest  from  such  day,  to  the  day  when  the  bills  would  fall  due, 
and  they  credited  the  customers  for  the  whole  amount  of  bills  paid  in  by 

(o)  Harris  v.  Farwell,  13  Beav.  403. 

(p)  Ex  parte  Hippins,  2  Gly.  &  J.  93,  on  appeal,  cor.  Lord  Eldon,  L. 


GRANT  ON  THE  LAW  OF  BANKING. 

them,  debiting  them  fur  interest,  in  like  manner;  and  when  an  order,  or 
oheque,  was  paid  in  for  a  bill  to  be  drawn  on  a  future  day,  they  calcu- 
lated, and  allowed  interest,  on  the  next  quarterly  day,  to  the  time  when 
-urli  bill,  it'  drawn,  would  become  payable.  It  appeared  that  the  account 
of  13.  had  been  settled  only  six  times,  between  May,  1789,  and  March. 
IT'.'-'!,  but  that  each  of  these  settlements  took  place  on  a  quarterly  day. 
On  the  L8th  March,  1793,  Oaldwells  became  bankrupt  (after  which,  of 
course,  they  could  not  give  a  bill,)  a  quarterly  day  having  intervened 
between  the  payment  of  the  order  into  the  bank  and  the  bankruptcy,  but 
r*q.->m  uP°n  this  last-mentioned  quarterly  day,  im  settlement  of  *accounts 
L  **  J  took  place  between  the  bankers  and  B.  The  amount  of  the 
order  was  never  carried  out  as  cash,  nor  was  any  calculation  of  interest 
thereon  ever  made  until  after  the  bankruptcy.  When  the  order  was  paid 
in,  there  was  a  balance  in  favour  of  B.,  on  his  account,  of  51/.  lis.,  but 
the  account  was  much  overdrawn  before  the  bankruptcy,  without  any 
other  addition  having  been  made  to  the  credit  side  of  the  account, 
beyond  the  order  in  cpuestion. 

On  these  facts,  the  Court  of  Exchequer  held  that  the  order  did  not 
amount  to  payment,  and  that  in  an  action  of  assumpsit,  by  B.  against  A., 
for  goods  sold  and  delivered,  it  was  not  competent  to  the  defendant  to 
prove,  by  the  bankers'  books,  that,  at  the  last-mentioned  quarterly  day, 
the  account  between  him  (A.)  and  Caldwells  was  settled,  at  which  time 
he  was  debited  with  the  whole  amount  of  the  order,  and  credited  for 
interest  thereon,  from  the  day  of  the  settlement,  to  the  day  when  the  bill. 
mentioned  in  the  order,  if  drawn,  would  have  become  due. 

Now,  it  was  obviously  material  for  the  buyer  to  make  out  that  a  settle- 
ment had  taken  place,  before  the  bankruptcy,  between  the  sellers  and 
tin-  bank,  for  that  would  have  changed  a  transaction,  which  was  only  a 
bill  transact  inn,  into  a  money  transaction.  But  the  order  did  not  amount 
to  payment.  1„  cause,  on  the  facts,  the  court  was  of  opinion,  that  the 
seller  of  the  goods  had  never  accepted  it,  as  payment.  The  evidence 
was  not  admissible,  because,  although  similar  evidence  was  admissible, 
and  was  admitted,  to  show  how  the  account  stood  between  the  seller  and 
Caldwells,  inasmuch  as  it  was  an  essential  part  of  the  transaction,  and 
arose  ae  much  out  of  one  side  of  the  case  as  out  of  the  other,  the  seller 
being  bound  to  show  what  had  become  of  the  order  given  to  him  for  the 
goods  :  yet,  though  the  buyer  and  Caldwells  had  had  a  settlement,  and 
the  former  hail  agreed  to  be  accounted  debtor,  in  the  bank,  for  the 
amount  of  the  order,  the  seller  was  not  acquainted  that  he  had  acquired 
r*q9l"|  this  new  credit  in  the  books  of  the  bank  ;  and  *thc  bank,  if 
L  ~  J  caJled  upon,  in  consequence  of  this  agreement  between  the  buyer 
and  them,  to  paj  the  amount,  to  the  seller,  might  have  answered — "It 
is  true  we  have  admitted  the  buyer  to  be  our  debtor  fur  the  amount,  but 
what  use  can  you,  a  third  party,  make  of  that  agreement  ?"  The  bankers, 
therefore,  could  not  have  been  charged,  by  the  sellers,  and,  therefore, 
the  evidence,  which  would  have  been  of  no  avail,  if  admitted,  was  pro- 
perly  excluded. (</) 

(?)  Brown  \.  Kewley,  2  B.  &  P.  518;  see  2  Chit.  R.  619. 


BANKRUPTCY.  239 

Friendly  Societies. — With  regard  to  the  nature  of  the  claims  of 
friendly  societies,  whose  moneys  have  been  deposited  with  bankers  for 
the  sake  of  the  convenience  of  making  payments,  and  of  security,  in  case 
of  the  bankruptcy  of  the  bankers,  it  has  been  settled  that  bankers, 
although  they  may  have  been  named  treasurers  of  a  friendly  society,  are, 
nevertheless,  not  "officers"  of  the  society,  within  the  meaning  of  4  &  5 
Will.  IV.  c.  40,  s.  12,  so  as,  upon  their  bankruptcy,  to  entitle  the  society 
to  payment  in  full  of  the  balance  due  to  the  society ;  and  this  is  so, 
whether  the  bankers  had  been  permanently  appointed  treasurers, (r)  or 
only  for  an  occasion.(s) 

Nor  are  they  "  employed"  as  officers,  when  there  is  no  formal  appoint- 
ment of  treasurer,  but  all  that  occurs  is  merely  that  the  moneys  of  the 
society,  (except  what  is  wanted  for  current  expenses,)  are  paid  into  the 
bank.M 

Fraudulent  Preference. — The  following  transaction  has  been  looked 
upon  as  doubtful,  whether  it  amounted  to  a  fraudulent  preference,  or 
not. 

An  army  agent  is  in  the  habit  of  advancing  money  to  his  customers, 
on  their  pay  and  pensions ;  this  he  does  by  cheques  on  his  bankers.  He 
overdraws  his  account  with  *his  bankers,  and  agrees,  in  consi-  [-#3221 
deration  of  new  credit,  to  pay  over  to  them,  as  he  receives  them,  L  ""J 
the  funds  that  come  to  his  hands  half-yearly  from  government,  for  the 
discharge  of  pensions  :  this  arrangement  is  not  known  to  the  authorities 
who  issue  these  moneys.  The  army  agent  then,  unknown  to  his  bankers, 
commits  an  act  of  bankruptcy,  and,  having  subsequently  received  some 
government  moneys,  pays  them  over,  in  pursuance  of  the  arrangement, 
being  indebted  to  the  bankers  in  more  than  the  sum  paid  over ;  and 
though  it  was  admitted,  on  all  sides,  that  if  the  sums  were  put  into  the 
bank  merely  to  enable  the  bankrupt  to  go  on,  in  business,  for  a  time, 
they  were  not  payments  in  fraud  of  creditors  :  yet  it  was  not  denied  that 
the  jury  might,  on  the  above  facts,  and  the  course  of  dealing,  after  the 
new  credit,  have  inferred  a  previous  contract  or  engagement;  but  a  pay- 
ment made,  after  an  act  of  bankruptcy,  in  compliance  with  a  previous 
binding  contract,  is  not  a  fraudulent  preference  of  the  creditor  paid.(-w) 

But  when  a  country  bank,  being  in  failing  circumstances,  and  having 
suspended  payment,  and  who,  a  few  days  afterwards,  became  bankrupt, 
handed  over  to  a  partner  of  a  London  banking  house,  their  correspondents, 
certain  cash,  bills,  and  notes,  part  of  them  in  the  expectation  that  assist- 
ance would  be  given  them,  and  part  without  such  expectation,  but  with- 
out any  intention  of  undue  preference,  and  without  any  contemplation  of 
bankruptcy,  at  the  time ;  both  were  held  to  be  recoverable,  by  the 
assignees,  as  money  had  and  received  to  their  use,(.r)  part  as  being  a 

(r)  Ex  parte  Harris,  De  G.  R.  162. 
(,s)  Ex  parte  Whipham,  3  M.  D.  &  De  G.  564. 
(t)  Ex  parte  Orford,  De  G.  &  Mac.  Bank.  R.  83. 
(u)  Vacher  v.  Cocks,  1  B.  &  Ad.  145. 

\x)  Simpson  v.  Sikes,  6  M.  &  Selw.  295;   see  Gibson  v.  Muskett,  4  M.  &  Ura. 
160;  Gibson  v.  Bruce,  5  id.  199. 

February,  1857. — 17 


240         GKAXI  OH  TEE  LAW  OF  BANKING. 

fraudulent  preference,  and  part  as  being  delivered  in  the  hope  of  receir- 
iiilt  assistance,  which  had  never  been  rendered. 

/'..//-.  /■>•  nf  Assignee*. — A.  being  tenant  for  life,  without  impeachment 
of  waste,  with  remainder  to  1!.  for  lite,  without  ^impeachment  of 
J  waste,  remainder  ever,  carried  on  business  as  ;i  banker,  iii  pari 
aership  with  B.  and  others;  and  the  lirm  having  become  haukrupt,  tin 
assignees  cut  down  ornamental  timber. 

The  court  held  them  not  to  be  entitled  to  the  income  arising  from  the 
proceeds  of  the  timber  wrongfully  cut  down,  either  during  the  life  of  A. 
or  the  life  of  B.,  but  that  such  proceeds,  together  with  the  accumulated 
income  thereof,  belonged  to  the  first  tenant  in  tail.)//) 

Bankruptcy  of  Customer*. — Bankers  have  been  Bhown  to  be  liable  at 
the  Buit  of  a  customer,  if  they  fail  to  comply  with  his  orders;  ex.  <jrn.. 
if  they  fail  to  apply  moneys  paid  to  them  lor  the  purpose,  to  the  payment 
<>t  bills  accepted  by  him,  and  made  payable  at  their  bank.  So,  if  the 
customer  becomes  bankrupt  before  commencing  the  action,  his  a-H-nrc- 
may  sue  the  bankers  and  recover  damages,  and  the  sum  which  they 
recover  they  may  retain  against  the  holders  of  the  bills,  who  will  be 
reduced  to  prove  against  the  estate,  for  the  amounts  of  the  bills. {z\ 

There  is,  sometimes,  considerable  difficulty  in  questions  as  to  dealings- 
between  bankers  and  customers  on  the  verge  of  bankruptcy. 

If  bankers  receive  and  pay  money  on  account  of  a  bankrupt,  after 
untie. ■  of  his  bankruptcy,  they  cannot  set-off  the  payments  against  the 
receipt-  :  for  as  every  man  is  bound  to  know  the  law,  they  must  be  taken 
to  have  known — that  a  bankrupt  is  not  a  free  agent,  and  has  no  longer 
the  disposition  of  his  property  :  that  they  were  not  bound  to  honour  his 
cheques  in  favour  of  creditors;  that  by  so  doing  they  were  doing  an 
illegal  act,  and  were  assisting  in  committing  a  fraud  on  the  rest  of  the 
the  bankrupt's  creditors,  who  were  not  the  payees  of  the  cheques;  the 
spirit  and  intention  of  the  bankrupt  laws  being  an  equal  distribution  of 
r*39i.n  'ne  t'^tHts  "''the  bankrupt  among  all  his  creditors.  Therefore, 
L  -I  the  assignees  will  be  entitled  to  recover  from  the  bankers,  the 
whole  of  the  sums  received  by  them,  on  account  of  the  bankrupt  after 
the  bankruptcy,  without  any  deduction  fur  the  payments  to  whatever 
amount  made  to  hi-  orders;  which  being  made  illegally,  and  besides 

in  their  OWD  WTOUg,  fall  Bfl  a  loSS  upon  the  bankers. ( a  ) 

It  was  also  attempted  on  behalf  of  the  bankers  in  this  case,  to  obtain 
the  benefit  of  an  assignment,  i  deed,  for  which  purpose  instructions  had 
heen  gives  by  the  bankers  to  their  attorney  to  prepare,  and  which  pur- 
ported to  convey  to  them,  two  ships  of  the  bankrupt  then  at  sea,  together 
with  their  freight,  and  an  exchequer  tally;  but  as  it  appeared  that, 
although  the  instructions  had  been  given  before  the  bankruptcy,  the 
deed  had  not  been  executed.  b_\  the  bankrupt  until  alter  the  bankruptcy, 
the  banker-  could  have  no  advantage  of  the  assignment. (a) 

[iushington  v.  Holder...  2]  L.  .1  .  Chanc.  49;  8.  C,  16  Jur.  140. 

1    1  .ml..  U.  51. 

Vernon  v.  Bankey,  2  T.  K.  113  ;  8. 1  0.  C.  313;  Bee  Raphael  v.  Biri- 

w.iini,  :,  Price,  593.     What  acta  are  acts  of  bankruptcy,  see  1  Welsby,  State.  2]  '. 

•.  221,  222,  and  2  id.  587.     Closing  doors  of  bank  is  one.    Cum- 


BANKRUPTCY.  241 

It  was  further  attempted  to  make  out  on  the  part  of  the  bankers,  after 
the  trial  and  verdict,  that,  as  a  bill  of  sale  of  one  of  the  ships,  and  the 
exchequer  tally,  had  been  deposited  by  the  bankrupt  with  them,  fur  some 
time  previous  to  the  bankruptcy,  as  "  security  for  money  overdrawn,  or 
to  be  overdrawn,"  by  the  bankrupt,  and  that,  upon  the  faith  of  these 
deposits,  the  bankers  had  afterwards  advanced  large  sums  of  money, 
but  had  given  up  both  the  bill  of  sale  and  the  tally,  upon  the  assignment 
being  executed,  when  the  assignment  was  declared  void,  their  lien  upon 
these  securities  revived ;  but  the  court  negatived  this  claim  also,  but  only 
on  the  ground  that  this  matter,  which  was  brought  *before  the  r^qor-i 
court,  for  the  first  time  on  a  motion  for  a  new  trial,  and  by  way  L  '  ~  J 
of  affidavit,  had  not  been  proved  at  the  trial.  If  that  had  been  done, 
it  may  be  gathered  from  what  fell  from  the  court,  that  the  bankers  would 
have  been  allowed  in  respect  of  this  lien,  to  deduct  the  values  of  the 
ship  and  exchequer  tally,  from  the  sums  paid  in  since  the  bankruptcy, 
and  would  only  have  been  liable  to  the  assignees  for  the  difference,  if  it 
had  been  clearly  made  out  at  the  trial,  that  the  deposits  were  made 
originally  to  secure  money  antecedently  due. 

But  although  bankers,  like  all  other  subjects,  are  bound  to  know  the 
law,  as  well  statute  as  common  law ;  and,  although,  if  they  understand 
the  fact  out  of  which  the  law  arises,  or  to  which  it  applies,  that  is  suffi- 
cient to  establish  their  responsibility,  and  they  are  bound  by  the  conse- 
quences ;  yet,  it  does  not  necessarily  follow,  that  a  banker  should  under- 
stand the  situation  of  those  that  employ  him,  and  if  he  has  no  notice  of 
their  insolvency,  he  will  be  protected  in  the  payments  he  makes  to  them.(^) 

As  regards  the  cases  in  which  bankers  are  entitled  to  prove  in  bank- 
ruptcy, against  bankrupts  with  whom  they  have  had  dealings,  it  may  be 
observed,  of  the  greater  part  of  the  decisions  which  are  extant,  that  they 
are  deserving  of  great  attention;  the  rest  do  not  present  such  peculiari- 
ties as  would  warrant  notice  here ;  as  these  rest  on  the  general  principles 
which  are  applicable  to  all  cases  of  bankruptcy,  the  points  they  involve 
must  be  looked  for,  in  works  professing  to  treat  the  whole  subject  of 
bankruptcy. 

A  customer  pays  in  bills  of  exchange  to  his  bankers,  and  becomes  a 
bankrupt.  The  bankers  prove  in  the  first  place,  for  the  whole  balance 
due  to  them  from  him,  and  afterwards  some  of  the  bills  are  paid  them 
in  full,  by  other  parties  *liable  on  them ;  some  before  and  some  r^oQl 
after,  the  dividend  is  declared.  In  these  circumstances,  the  L  Jj  J 
proof  will  be  reduced  by  the  amount  of  the  paid  bills ;  the  dividends 
must  be  refunded,  so  far  as  they  relate  to  those  bills. (c) 

ruing  v.  Bailey,  6  Bing.  363  ;  Mills  v.  Bennett,  2  Mau.  &  S.  556.  Notice  to  ac- 
credited agent  of  a  corporation  or  public  company,  of  an  act  of  bankruptcy,  is  no- 
tice to  the  corporation  or  company.  12  &  13  Vict.  c.  106,  s.  87.  The  public  ofh- 
cer  is  to  make  the  docket  affidavit  where  a  corporation  is  the  petitioning  creditor. 
Ex  parte  Collins,  De  G.  Bank.  R.  381. 

(b)  2  T.  R.  121,  122  ;  12  &  13  Vict.  c.  106,  s.  165  ;  see  2  Cox,  Ch.  Cas.  12.  N.B. 
— The  mistake  made  in  relying  on  the  assignment,  at  the  trial,  and  not  on  the  lien, 
was  attributable,  as  appears,  (2  T.  R.  124,)  to  the  bankers  themselves,  and  not  to 
their  counsel. 

(c)  Ex  parte  Hornby,  De  G.  Bank.  R.  69. 


242  GRANT    OH    THE    LAW    OF    BANKING. 

Where  there  is  more  than  one  assignee  of  a  bankrupt,  and  an  account 
is  opened,  on  behalf  of  the  estate,  with  a  banker  in  their  joint  names,  if 
must  be  remembered,  thai  nol  being  the  account  of  partners  in  trade, 
the  banker  is  oot  discharged  by  payment  to  one  of  tin-  assignees,  without 
the  authority  of  the  rest  ;  and,  therefore,  that — every  banker  as  before 
stated,  being  bound  to  know  the  handwriting,  and  what  is  not  the  hand- 
writing, of  his  customers — a  payment  made  to  a  cheque,  really  signed  by 
one,  but  bearing  a  forged  signature  of  the  other  assignee  will  not  be 
valid  ;   in  other  words  the  money  must  be  paid  over  again. (</) 

Money  due  for  calls  on  shares  in  a  joint-stock  banking  company,  is 
OOt  such  an  ascertained  debt,  as  entitles  the  company  to  prove  against  a 
bankrupt  shareholder,  without  first  taking  the  accounts.).  ) 

K  a  bankrupt  after  an  act  of  bankruptcy,  of  which  his  bankers  had 
notice,  though  not  the  act  of  bankruptcy  on  which  the  fiat  was  founded, 
draw  upon  them  cheques  in  favour  of  creditors,  which  are  paid  by  the 
bankers,  they  will  not  be  admitted  to  prove  for  the  amounts  of  them.(/) 

So,  if  bankers,  with  a  knowledge  of  an  act  of  bankruptcy  of  a  cus- 
tomer,  take  a  guarantee  from  a  surety  for  him,  to  secure  to  a  given 
amount,  all  sums  then,  or  thereafter  to  become  due  from  the  customer, 
and  the  surety  having  had  no  notice  of  the  act  of  bankruptcy,  afterwards 
pay  the  bankers  the  full  sum  for  which  he  was  guarantee,  without  specify - 
r->.)9--i  ing  to  which  portion  of  the  bankers'  debt  the  payment  *was  to 
L  "-']  Reapplied:  the  payment  will  be  appropriated  in  reduction  of 
that  portion  of  the  bankers'  debt,  which  was  provable  under  the  fiat, 
and  not  of  that  which  was  not  provable. (//) 

A  bolder  of  an  unpaid  cheque,  it  has  been  thought, (Zt)  has,  as  assignei 
of  a  chose  in  action,  an  equitable  claim  on  the  banker  on  whom  it  is 
drawn,  and  may  prove  for  the  amount  of  it  upon  his  bankruptcy. 

A  customer  at  the  time  of  his  bankruptcy,  is  indebted  largely  to  hie 
bankers;  they  are  made  bankers  to  his  assignees;  they  then  become 
bankrupts;  their  assignees  cannot  draw  a  dividend  under  the  customer's 
bankruptcy,  until  they  have  accounted  for  the  whole,  which  the  bankers 
have  received  as  bankers,  to  the  assignees. (/) 

\  customer  of  a  banking  house  had  a  large  sum  in  their  bauds. 
Under  the  old  law  of  bankruptcy  a  commission  issued  against  him,  but 
TOG  not  proceeded  with,  though  it  still  remained  in  force:  the  hankers 
in  this  state  of  things  refused  to  honour  the  customer's  cheques.     The 

customer  Sues    them;    and    they  file  a  bill  Stating   the  circumstances  and 

praying  an  injunction  to  restrain  die  proceedings  at  law,  upon  their  pay- 
ment of  the  whole  Bum  in  their  bands,  into  court. 

It  will  be  observed,  that  here  being  oo  assignees  appointed,  there 
.v.,-  no  one  against  whom  a  bill  of  interpleader  could  have  been  tiled. 

(d)  tnncs  v.  Stephenson,  1  M.  4  Rob.  L4B;  see  2  I..  81.  &  P.  50;  10  0.  B.  640 
I  v.  Lee,  M.  A  M 

i.    |  irte  Snape,  Mom.  A  C.  Rep.  607  j  B.  0.,  i  Deac.  L64. 
Ex  parte  Sharpe, 3  M.  D.  A  De  <;.  190    -■•    !  Robb,  71  :  Bamford  r.  Bnrrell, 
2  B.  .v  P.  1  ;   L2  .v  13  7ic1   c.  106,  B.  166. 
9    Ei  parte  Sharpe,  3  M.  D.  s  De  <■■  490. 
(//i   •  on  Bills,  17,  6th  edit.  an.  tam, 

'.    19  V. -.  222;  Bx  parte  Graham,  3  Ves.  k  B.  130. 


BANKRUPTCY.  243 

The  court  held,  that  there  was  no  ground  for  interference  with  the  pro- 
ceedings at  law,  notwithstanding  the  existence  of  the  commission. (k) 

The  long-settled  practice  establishes,  that  a  country  banker,  whose 
usage  it  is  to  discount  bills,  charging  5?.  per  cent,  interest,  and  commis- 
sion at  the  rate  of  2s.  6c?.  per  cent,  per  month,  for  the  time  the  bills  had 
to  run,  may  prove  in  bankruptcy,  for  the  amount  of  the  bills,  r^ooftl 
together  with  interest  and  commission. (?)  And  where  the  bankers  L  "  J 
carried  on  business  at  Favershani,  and  discounted  bills  for  the  bankrupt, 
before  the  bankruptcy,  which  bills  were  drawn  by  him  upon  and  accepted 
by  persons  resident  in  London,  so  that  there  was  nothing  to  be  done,  ex- 
cept merely  writing  to  the  bankers,  their  correspondents  in  London, 
where,  and  through  whom  the  money  on  the  bills  was  paid  j — that  was 
held  by  Lord  Eldon  to  be  a  case  with  the  rule.(m) 

On  the  other  hand,  in  case  of  the  bankruptcy  of  the  bankers,  their 
assignees  are  entitled  to  recover  in  like  manner  from  the  customer,  or 
for  the  interest  on  the  balance  against  the  customer,  both  for  the  time 
that  it  has  been  against  him,  previously  to  the  bankruptcy,  and  for  the 
time  since  elapsed. («)  The  bankruptcy  did  not  make  it  less  the  duty, 
and  it  made  it  more  the  interest  of  the  customer  to  discharge  the  debt, 
and  he  must  make  an  equivalent  for  not  having  done  so. 

A.  was  indebted  to  a  bank  in  20,000/.,  on  the  balance  of  his  account. 
The  firm  agreed,  that  if  A.,  and  another  party,  B.,  would  give  a  bond 
for  paying  10,000?.,  by  yearly  instalments  of  1,000?.,  paying  interest  on 
any  instalment  which  might  be  in  arrear,  the  debt  should  be  considered 
as  reduced  to  10,000?.,  and  cancelled.  The  bond  was  given.  Before 
the  first  instalment  became  due,  both  the  firm  and  A.,  became  bankrupt, 
when  the  assignees  of  the  firm  claimed  to  prove  against  A.'s  estate,  for 
the  whole  20,000?.  and  interest.  The  proof,  however,  on  the  ground  that 
an  additional  debtor  had  been  introduced,  by  the  agreement,  and  that  as 
the  bond  contemplated  the  falling  into  arrear  of  the  instalments,  and  as 
none  of  the  particulars  of  the  agreement  *had  been  reduced  into  p^cn 
writing,  the  old  debt  must  be  considered  to  have  been  intended  L  -1  J 
to  be  satisfied  by  the  bond.(o) 

A  firm  of  B.  &  Co.,  shipowners  in  the  country,  had  dealings  with  K. 
&  Co.,  bankers  in  London;  the  course  of  dealing  being,  that  B.  &  Co. 
drew  bills  on  K.  &  Co.,  which  K.  &  Co.  accepted,  for  the  accommoda- 
tion of  B.  &  Co.,  who,  in  order  to  provide  for  the  payment  of  these  bills, 
remitted  to  K.  &  Co.,  cash,  and  deposited  with  them  bills  payable  to 
themselves  (B.  &  C.  ;)  the  amount  of  these  bills  was  received  by  K.  & 
Co.,  and  placed  to  the  credit  of  B.  &  Co.'s  cash  account.  Both  firms 
became  bankrupt  in  1812  ;  K.  &  Co.,  in  July,  B.  &  Co.  in  August;  there 
being  at  the  latter  date,  a  large  balance  owing  by  B.  &  Co.,  to  K.  &  Co., 
on  their  account ;  K.  &  Co.  being  also  liable  to  a  large  amount,  on  the 

(k)  Fuller  v.  Gibson,  2  Oox,  Oh.  24. 

(I)  Benson  v.  Parry,  cited  2  T.  R.  52  ;  Winch  v.  Fenn,  2  T.  R.  52,  n. ;  see  Aunol 
v  Thomas,  2  T.  R.  52 ;  Hammett  v.  Yea,  1  B.  &  P.  144;  see  3  B.  &  P.  161. 
(m)  Ex  parte  Jones,  17  Ves.  332 ;  see  Baynes  v.  Fry,  15  Ves.  120. 
(n)  Pott  v.  Beavan,  7  M.  &  Gra.  604. 
(o)  Ex  parte  Hemaman,  12  Jur.  643 ;  S.  C,  17  L.  J.,  Bank.  17. 


•JH         -i  KANT  ON  THE  LAW  OF  BANKING. 

accommodation  bills  accepted  by  them  for  B.  &  Co.,  and  having  in  their 
hands,  bills  also  to  a  large  amount,  deposited  with  them  by  B.  &  Co.,  to 
provide  for  the  payment  of  such  acceptances.  Before  any  dividend  was 
declared  on  the  estate  of  K.  &  Co.,  their  assignees  realized  from  the  de- 
posited bills,  more  than  sufficient  to  liquidate  the  cash  balance  due  from 
1!.  &  Co.  The  holders  of  the  accommodation  bills  proved  against  both 
estates,  and  were  fully  paid,  receiving  ten  shillings  in  the  pound  from 
each  estate.  The  sum  thus  paid,  by  the  estate  of  K.  &  Co.,  exceeded, 
by  above  6,000/.  the  whole  sum  realized  from  the  deposited  bills.  No 
debt  was  proved,  nor  attempted  to  be  proved,  on  behalf  of  the  estate  of 
K.  \  Co.,  against  the  estate  of  B.  &  Co.,  until  1847,  when  a  further 
portion  of  the  outstanding  estate  of  B.  &  Co.  was  realized,  but  to  an 
aim mnt  insufficient  to  pay  twenty  shillings,  in  the  pound,  to  their  credi- 
tors, exclusively  of  K.  &  Co. 

( in  a  claim  made  on  behalf  of  the  estate  of  K.  &  Co.,  the  assignees 
were  held  to  be  entitled  to  prove  the  cash  balance  due  by  B.  &  Co.,  and 
also  the  0,000/.,  and  that  in  respect  of  the  6,000/.,  and  until  thereby 
piton/yi  that  sum  was  repaid,  they  *were  entitled  to  the  benefit  of  the 
-I  proofs  made  against  the  estate  of  B.  &  Co.,  by  the  holders  of  the 
accommodation  bills,  (j?) 

In  the  same  case,  a  principle  was  recognized,  as  of  general  application, 
which  it  may  often  be  very  material,  to  their  interests,  for  bankers  who 
hold  securities  to  be  aware  of;  namely,  a  creditor  holding  a  security,  is 
entitled  to  apply  it  in  discharge  of  whatever  liability  of  the  bankrupt 
debtor  he  may  think  fit.Q>) 

Short  />'///>-,  (fee.,  deposited. — Enough  has  been  stated,  under  another 
division  of  the  subject,  to  show  fully  under  what  circumstances,  goods, 
\c,  in  the  order  and  disposition  of  bankers  pass  to  their  assignees,  on 
the  event  of  their  becoming  bankrupt,  and  that  among  these  are  not  short 
bills,  or  any  securities  deposited  with  them  for  the  purpose  of  obtaining 
payment  of  them,  as  agents  of  the  customer,  or  for  other  specific  purposes, 
and  not  as  money. (j) 

<  hi  the  other  hand,  bills  discounted  are  among  the  things  which  pass 
to  the  assignees. 

So,  if  bills  he  indorsed  to  a  banker  in  the  country,  in  exchange  for  his 
bill  upon  his  correspondent  in  London,  the  property  passes,  although  the 
latter  bill  be  dishonoured,  and  trover  will  not  lie  for  them,  against  the 
banker's  assignees.fr) 

Here  we  may  Btop  to  observe,  upon  the  absolute  necessity  of  keeping 
the  books  of  hanker-  correctly  ;  the  entries  in  them  are  obviously  of  the 
greatest  importance  to  the  interests  of  the  customers  ;  because  it  must 

lie  from    the  1 ks  that   the  clerks  of  the  bank,  and    others,  are   to  find 

whether  the  cheque  of  a  customer  is  to  be  honoured,  or  not,  and  because 

;'    '        been   decided   to   be   proper  to  receive    in   evidence,  *a 

'  banker's  ledger,  to  show  that  a  customer  had  no  assets  on  a 

i:    ;    ■!■  Johnson,  3  De  G.  K.  .v  G.  218. 

,160;  Zinck  \.  Walker.  2  W.  Bla.  l  L64. 
Parke  v.Elia    in,  l  Bast,  644;  Hornblower  v.  Proud,  2  B.  &  A.  327 ;  see  1 


BANKRUPTCY.  245 

given  day,  in  the  banker's  hands,  the  question  arising  in  an  action,  to 
which  neither  the  customer  nor  the  bankers  were  parties.  In  the  same 
case,  it  was  thrown  out  that  the  books  might  not  be  evidence,  to  show 
affirmatively,  that  the  customer  had  money  in  the  bankers'  hands. (s) 

If  a  trader,  after  an  act  of  bankruptcy,  draws  a  bill  of  exchange  upon 
his  bankers,  which  they  accept  for  a  sum,  for  which  in  part  tbey  hold 
effects,  but  for  the  residue,  accept  for  the  customer's  accommodation,  a 
party  suing  the  bankers  on  the  bill,  can  only  recover  for  so  much  of  the 
bill  as  had  been  accepted  for  the  accommodation  of  the  trader ;  for  the 
rest,  the  bankers  will  be  liable,  at  the  suit  of  the  assignees. (t\ 

So,  if  bankers  accept  a  bill,  for  the  accommodation  of  a  trader,  for  the 
payment  of  which  he,  after  an  act  of  bankruptcy,  but  before  fiat,  lodges 
money  with  them,  and  the  bill  when  due,  (which  is  after  the  fiat,)  is  paid 
by  the  bankers,  they  must  refund  to  the  assignees.  (u\ 

A  customer  of  a  bank,  who  had  been  used  to  deposit  with  them  bills 
of  exchange,  and  promissory  notes,  as  security  for  advances,  having  got 
four  bills  accepted  by  A.,  for  his  accommodation,  deposits  them,  with 
the  bank,  to  secure  his  floating  balance ;  he  then  becomes  bankrupt, 
when  the  bankers  prove  for  a  balance  greatly  exceeding  the  amount  of 
the  bills,  excepting  them  loith  others,  in  their  proof,  as  securities.  They 
afterwards  receive  a  dividend  of  two  shillings  in  the  pound,  on  the 
amount  of  their  proof. 

The  bills  were  paid  in  full,  to  the  bankers,  by  A.,  and  he  was  held  to 
have  a  title  (as  a  surety  entitled  to  stand  in  place  of  the  creditor  proving, ) 
to  call  upon  the  bankers  *to  refund  the  amount  of  the  dividend  ^t^OC)^ 
of  two  shillings,  on  the  amount  of  the  bills  ',{x\  for  such  a  divi-  *-  J 
dend  cannot  be  treated  as  a  payment  generally,  on  account  of  the  whole 
debt,  but  must  be  considered  as  a  payment  of  part  of  each  pound  of  the 
debt. 

A  customer  indorses,  and  pays  into  a  bank,  in  usual  course  of  dealings, 
certain  bills  of  exchange  :  these,  in  conformity  with  the  usual  practice  of 
the  bank,  as  regarded  this  customer's  bills,  are  carried  to  the  credit  of 
the  customer,  and  cheques  are  drawn  by  the  customer,  and  payments 
made,  from  time  to  time ;  on  the  bills  arriving  at  maturity,  the  customer 
is  debited  with  the  amount  of  those  that  were  dishonoured.  The  balance 
of  the  account  is  struck  every  half  year ;  the  customer  becomes  bankrupt ; 
the  bankers  prove  for  the  whole  balance  due" ;  afterwards,  some  of  the 
bills  are  paid  in  full,  by  other  parties  liable,  some  before,  and  some  after, 
the  dividend  is  declared.  This  renders  it  necessary  to  reduce  the  proof 
by  so  much,  and  refund  the  dividends  to  that  extent.(y) 

A.,  B.,  C.  and  D.  were  four  partners  constituting  a  banking  firm. 

A  customer,  under  an  agreement  with  them,  pays  in  bills  of  exchange, 

(.s)  Furness  v.  Cope,  5  Bing.  114  ;  and  see  Brown  v.  Kewley,  2  B.  &  P.  518. 
'  (t)  Willis  v.  Freeman,  12  East,  656. 

(u)  Tamplin  v.  Diggins,  2  Camp.  312;  see  Vernon  v.  Hall,  2  T.  R.  248;  Pinker- 
ton  v.  Marshall,  2  H.  Bla.  334. 

{%)  Ex  parte  Holmes,  per  Lord  Cottenham,  C,  4  Deac.  82  ;  see  Bardwell  v.  Ly- 
dall,  1  Bing.  489. 

(y)  Ex  parte  Hornby,  De  G.  Bank.  R.  69. 


246  ',1;  ANT    OH    THE    LAW    OF    BANKING. 

Indorsing  them,  it  being  the  amngemi  nl  that  he  should  take  out  instead, 
their  promissory  notes,  they  allowing  him  twenty-four  days'  interest  on 
each  bill  paid  in.  I  *n  22nd  July,  separate  commissions  of  bankrupt 
issue  against  three  of  the  hankers,  I!..  C.  and  D.  On  the  23rd  Julv. 
the  customer  receives,  from  the  bank,  notes  to  the  amount  of  1001. ; 
next  day,  he  pays  in  two  indorsed  bills  for  7">/.  ami  70?.  respectively, 
due  on  the  17th  of  August.  On  4th  August,  ;i  commission  issues  against 
A.  On  12th  August,  tin  former  commissions  are  superseded,  for  a 
joint  commission  against  the  firm. 

P -,       *Tuder  these  circumstances,  it  was  held,  that  the  assignees 

L  J  were  not  entitled  to  retain  the  bills,(z)  on  the  ground  that  tin 
relation  of  debtor  and  creditor  never  subsisted  prior  to  the  bankruptcy, 
and  that  the  consideration  had  failed,  on  which  alone  the  bills  were 
parted  with. 

Where  bankers  proved  against  a  customer  for  their  whole  debt,  as 
shown  on  the  drawing  account  between  him  and  the  bank,  and  exhibited 
bills,  deposited  with  them  by  him,  as  securities,  and  then  received  the 
amount  of  some  of  the  bills  so  deposited;  the  proof  was  ordered  to  be 
expunged,  the  lulls  remaining  unpaid  were  ordered  to  be  sold,  and  a  new 
proof  to  be  made,  deducting  all  that  was  received,  on  account  of  the  bills, 
considering  them  as  mere  pledges. (a) 

Mutual  Credit  <nu7  Set-off. — With  respect  to  questions  of  mutual 
credit  and  set-off,  in  bankruptcy,  it  will  be  desirable  to  state  the  points, 
which  most  frequently  arise,  in  the  business  of  bankers.  The  following 
case  forms  an  useful  illustration  of  the  principles  governing  these  ques- 
tion- : — 

A  trader  having  obtained   large  advances,  from  the    JJank   of  Bengal, 
[ted   company's   paper  with  them,  as  collateral  security,  with  have 
to  them  to  sell,  in  default  of  his  repayment  of  the  loan,  by  a  given  day, 
paying  over  the  surplus,  if  any,  to  him. 

Before  default  in  the  repayment  of  the  loan,  he  was  declared  insolvent, 
under  the  Indian  Insolvent  Act,  which  declares  that  when  there  has 
been  mutual  credit  by  the  insolvent,  and  any  other  person,  one  debt  or 
demand  may  be  set  off  against  the  other,  and  that  all  debts,  provable  in 
Bngland,  shall  be  provable  in  India,  &c.  In  fact,  the  enactments  are 
precisely  similar  to  the  part  of  the  English  Bankrupt  Act,  which  regu- 
late- this  subject. 

At  the  time  of  the  insolvency,  the  bank  also  were  holders,  as  indor 

of  two   promissory  not.-,  made   by  the  trader,  *whloh   tin-  bank 
had  discounted  lor  him,  before  the  making   of  the  loan,  and  de- 
posil  of  tin-  company  -  paper. 

Tie-  time  of  repayment  of  the  loan  having  elapsed,  the  bank  sold  tin 
company's  paper,  the  proceeds  of  which,  after  defraying  principal  and 
inter,  -t.  produced  a  considerable  surplus. 

The  assignees  of  the  trader  brought  an  action  to  recov<  r  this  surplus, 

when  it  was  held  that  the  bank  had  no  right   to  setoff  the  amount  of  the 

two  promissory  cotes;  this  cot  '"  ing  a  case  of  „,,</,/, ,i  credit,  Buch  as  is 

Balwin,  cited  Vj  Ves.  230. 


[    -••''  I 


BANKRUPTCY.  247 

meant  by  the  Bankrupt  Acts ;  because,  although  it  has  often  been  said 
to  be  the  law,  that  where  the  one  debt  is  immediately  due,  and  the  other 
only  due  at  a  future  day,  there  is  a  mutual  credit  ;(?>)  yet,  in  all  of  the 
cases  which  have  so  decided,  it  was  certain  that  the  party  receiving  the 
credit  must,  sooner  or  later,  become  debtor  in  prcesenti;  that  a  power 
was  given,  over  funds,  which  the  party  giving  could  not  revoke ;  then 
also  the  debt,  in  order  to  be  set  off,  must  be  provable,  but  the  trader 
could  not  have  proved  for  a  contingent  surplus. (c) 

The  case  would  have  been  altogether  different,  if  the  bankers  had 
sold  the  paper,  and  received  the  surplus,  prior  to  the  bankruptcy,  then 
they  would  have  been  debtors  to  the  trader,  and  so  within  the  statute. 

It  is  a  well-known  rule,  that  whoever  takes  a  bill  must  be  considered 
as  giving  credit  to  the  acceptor ;  and  whoever  takes  a  note,  credit  to  the 
drawer.  But  what  more  particularly  belongs  to  the  subject  of  this  trea- 
tise, is  to  call  attention  to  a  qualification  which  has  been  engrafted  on 
the  rule,  involving  matter  of  interest  to  bankers.  That  qualification  is 
this,  that  the  holder  of  a  bill,  or  note,  in  order  to  be  entitled  to  the 
benefit,  or  to  be  within  the  enactments  respecting  *mutual  credit,  r^qo^-i 
and  set-off,  must  not  be  a  mere  agent,  holding  the  instrument  *-  '  -> 
for  the  benefit  of  other  parties.  The  following  instance  may  be  useful, 
as  an  illustration  of  the  proposition  : — Maberly's  assignees  sued  L.  &  Co., 
as  acceptors  of  a  bill  for  1,000?.,  drawn  by  the  Commercial  Bank,  and 
indorsed  to  Maberly.  At  the  time  of  Maberly's  bankruptcy,  L.  &  Co.  had, 
in  their  hands,  a  bill  for  700?.,  drawn  by  a  firm,  in  which  Maberly  was 
a  partner,  accepted  by  a  firm,  in  which  he  was  also  a  partner,  and 
indorsed  by  the  Commercial  Bank.  This  bill  became  due  on  the  day  on 
which  Maberly  stopped  payment,  on  which  L.  &'  Co.  protested  it,  and 
having  in  their  hands  sufficient  assets  of  the  Commercial  Bank  to  dis- 
charge it,  debited  the  company  with  the  amount,  and  sent  them  the  pro- 
tested bill,  with  the  receipt  for  it.  The  Commercial  Bank  sent  back  the 
bill,  requesting  L.  &  Co.  to  set  off  its  amount  against  their  own  accept- 
ance for  1,000?. ;  and  the  question  was,  whether  they  had  the  right  to 
do  so.  The  decision  was,  they  had  not ;  for  that  L.  &  Co.  were  not 
creditors  of  Maberly,  but  held  the  bill  for  700?.  as  agents,  ot  mere  trus- 
tees, for  a  foreign  house,  and  as  such,  had  no  right  to  set  it  off,^  against 
a  demand  made  on  themselves,  in  their  own  right,  (d)  The  rule  is  estab- 
lished, to  insist  upon  demands,  in  respect  of  which,  set-off  is  claimed, 
being  shown  to  be  in  the  same  right, (e)  in  cases  of  solvent  parties ;  but 
in  cases  under  the  bankruptcy  laws,  the  principle  adopted  is  not  quite 
the  same.(/) 

It  follows,  from  the  authorities  lately  cited,  that  there  is  no  mutual 
credit  when  securities  have  been  deposited  for  a  particular  purpose  with 

(b)  Ex  parte  Prescott,  1  Atk.  230  ;  Smith  v.  Hodson,  4  T.  R.  211  ;  Rose  y.  Hart, 
8  Taunt.  499. 

(c)  YoungV.  Bank  of  Bengal,  1  Deac.  680,  681,  H.  Lds. ;  see  12  M.  &  W.  151. 

(d)  Belcher  v.  Lloyd,  10  Bing.  316;  see  Foster  v.  Wilson,  12  M.  &  A\ .  191  i  Farf 
v.  M'lver,  16  East,  130  ;  Pollard  v.  Ogden,  2  E.  &  B.  459. 

(e)  Gale  v.  Luttrell,  1  Y.  &  J.  180;  Baillie  v.  Edwards,  2  II.  Lds.  .4,  is  not  aa 
exception  to  the  principle. 

(/)  See  per  cur.  Forster  v.  Wilson,  12  M.  &  W.  203. 


248  GRANT    ON    THE    LAVT    OF    BANKING. 

n  bank,  by  a  customer  whose  account  is  overdrawn,  or  to  whom  the 

bankers  have  lent  money. (,7) 

N  '-';//'. — A  trading  firm  waa  indebted  to  a  country  hanking 
L  '     J  copartnership,  consisting  of  three  partners,  called  the  Tweed 

bank,  on  the  balance  of  their  banking  account,  when  the  bank  stopped 
payment.  On  that  day  and  the  day  following  the  linn  received  from 
customers,  certain  hi.  notes  of  the  hank  in  part  payment  of  antecedent 
debts,  on  condition  that  they  were  to  debit  themselves  with  bo  much  only, 
on  account  of  these  notes,  as  they  should  receive  from  tie  assignees  in 
respect  of  the  notes.  These  notes  were  received  by  the  firm,  without 
notice  of  any  act  of  bankruptcy  by  the  bankers,  and  before  any  docket 
had  been  struck.  They  also  received,  during  the  same  day  on  which 
the  bank  stopped  payment,  certain  other  of  the  bank  notes,  from  persona 
not  debtors  to  them,  for  which  they  were  to  pay,  only  so  much  as  they 
should  receive  from  the  assignees  in  respect  of  them. 

In  an  action  brought  by  the  assignees  to  recover  the  amount  of  the 
balance  against  the  firm,  on  their  account  with  the  bank,  it  was  decided 
that  the  firm  had  a  beneficial  interest  in  the  notes  of  the  first  class,  and 
were,  therefore,  entitled  to  set  them  off  against  the  claim  of  the  assignees  ; 
but  that,  as  to  the  second  class,  they  held  these  merely  as  trustees  for 
others,  and  were  not  entitled  to  set  them  off.  It  was  not  disputed  that 
notes  which  they  held  as  having  received  them  before  the  bank  stopped 
payment,  in  bona  fide  payment  of  antecedent  debts,  and  for  goods  sold, 
might  be  set  off,  without  notice  of  any  act  of  bankruptcy. (A) 

The  law,  it  may  be  observed,  18  undoubted,  that  a  holder  of  country 
bank  notes  has  a  right  to  set  off,  in  an  action  by  the  assignees  of  the 
bankrupt  hankers  against  him,  bank  notes,  taken  by  him  alter  the  hank 
has  stopped  payment;  provided,  at  that  time  he  has  not  notice  of  an  act 
of  bankruptcy,  and  that,  notwithstanding  that  he  took  them  for  the  very 
purpose  of  making  them  the  subject  of  set  off,  and  in  substance,  of  get- 
ting 20*.  in  the  pound  upon  them.(c) 

r^oot-i  *A  customer's  account  with  his  bankers,  showed  a  balance  in 
L  I  his  favour  on  the  day  on  which  he  became  bankrupt.  Previously 
to  that  the  bankers  had  discounted  for  the  customer  bills  for  a  large 
amount,  which  were  indorsed  in  blank  by  the  customer,  and  two  of  them 
were  paid  by  the  acceptor  before  the  bankruptcy;  the  others,  much  ex- 
celling the  amount  of  the  customer's  balance,  did  not  become  due  before 
the  ]<itli  of  .November,  the  bankruptcy  having  taken  place  in  the  pre* 
vious  I  totober.  2nd  November  the  assignee  commenced  an  action  against 
the  bankers  for  the  balance;  8th  November  the  bankers  proved  against 
the  bankrupt'-  estate,  for  the  whole  of  'the  bills,  excepting  the  two  which 
had  been  paid,  and  deducting  the  amount  due  to  the  bankrupt  on  the 
balance  of  his  account,  on  which  credit  had  been  given  to  him  for  the 
amount  of  the  bills  discounted,  and  he  had  been  debited  with  the 

amount  of  the  discounts. 

(g)  See  i"  r  Parke,  I'...  Alsager  v.  Carrie,  L2  M.  &  YV.  751,  explaining  Young  v. 
of  Bengal. 

..  YYil-on.  12  If.  .v  VY.  191. 
(»)  Hawkins  v.  Wbitten,  L0  IS.  k  0.  217. 


BANKRUPTCY.  249 

The  transaction,  as  regards  the  bills,  being  considered  to  amount  to  a 
loan  of  money,  and  not  a  purchase  of  the  bills,  the  bankers  were  held 
to  be  entitled,  as  indorsees,  to  set  off  in  the  action  the  amount  of  the 
bills  not  due. 

Even  if  a  purchase  of  the  bills  had  been  made,  it  might  either  have 
been  proved  against  the  estate,  or  made  the  subject  of  set-off  in  an 
action. (k)  For  a  bill  is  provable  against  the  estate  of  the  drawer  before 
dishonour  by  the  acceptor,  and  if  provable,  then  by  the  terms  of  the 
statute  it  is  a  debt,  and  may  be  set  off.(?) 

The  following  is  a  case  of  set-off,  not  in  bankruptcy. 

Where  the  practice  of  a  bank  was  to  accommodate  a  customer,  A., 
with  a  loan  of  1,000?.,  upon  the  security  of  his  promissory  note,  which 
was  renewed  every  three  months,  the  bankers,  upon  these  occasions,  dis- 
counting the  note,  by  placing  the  amount  of  it  to  the  credit  of  A.,  as 
cash  paid  in  by  him,  and  debiting  him,  on  the  other  side  of  his  account, 
with  the  discount;  each  of  these  was  considered  *not  as  one  con-  r*33g-i 
tinuous  loan,  but  as  separate  transactions :  and,  therefore,  the  L  J 
bankers  having,  on  the  last  transaction,  (the  note  having  fifty-three  days 
to  run  at  the  time  of  the  death,)  entered  it  to  the  debit  of  A.'s  account, 
allowing  rebate  of  discount  for  the  time  it  had  to  run,  it  was  considered 
they  could  not  set  off  the  1,000?.  against  the  executor's  claim,  before 
the  fifty-three  days  were  out,  for  the  balance  of  A.'s  account. (m) 

A  question  of  very  considerable  importance,  under  this  head,  is,  what 
is  the  character  of  a  deposit  of  money  made  by  a  customer  with  his 
bankers,  to  meet  a  bill  which  he  has  accepted,  payable  there ;  is  it  a 
debt  within  the  statutes  of  set-off,  or  in  case  the  customer's  balance  on 
his  account  is  adverse,  is  there  a  mutual  credit  within  the  Bankrupt 
Act  ?  Now,  it  seems,  in  accordance  with  the  principles  that  have  been 
laid  down  previously,  and  with  reason,  that  when  a  customer  deposits  a 
sum  of  money  for  a  specific  purpose,  and  the  banker  receives  it  for  that 
purpose,  he  should  not  afterwards  be  entitled  to  turn  round  and  claim 
to  set  off  the  sum  against  money  due  to  him  from  the  customer ;  and  so 
it  has  been  decided,  in  an  action  of  special  assumpsit,  &c. :  and  the  cus- 
tomer or  his  assignees  upon  his  bankruptcy,  may  have  an  action,  if 
damage  has  resulted  to  the  customer,  from  the  bankers'  disobedience  to 
his  orders,  in  not  applying  the  money  deposited  in  payment  of  the  bill ; 
and,  in  such  action,  being  for  unliquidated  damages,  no  set-off  is  plead- 
able in  answer,(»)  and  the  sum  recoverable  is  the  whole  amount  of  the 
bill,(o)  or,  of  the  money  placed  in  the  bankers'  hands,  andmisapplied. 

The  customer,  or  his  assignees,  it  must  be  remembered,  might,  if  they 
had  chosen,  have  treated  the  money,  when  the  bankers  misapplied  it,  as 
a  debt,  and  sued  for  it  in  indebitatus  assumpsit,  which  would  have 
enabled  the  bankers  *to  have  had  the  benefit  of  the  set-off,  but  only  r*33cn 
in  consequence  of  the  form  of  the  action,  not  upon  the  merits. {p)  L 

Insolvency.— It  is  material  for  bankers,  who  have  to  do  with  cases  of 

(k)  Alsager  y.  Currie,  12  M.  &  W.  751.  (I)  Starey  v.  Barnes,  7  East,  435. 

(m)  Rogerson  v.  Ladbroke,  1  Bing.  93.  ,n«   fcw  eia 

n)  Bell  v.  Carey,  8  C.  B.  887.  («)  Hill  v.  Smith,  12  M.  &  W.  618. 
[p)  See  per  cur.  12  M.  &  W.  618. 


GRAN!  OS  THE  LAW  OF  LAN  KING. 

insolvency,  to  be  advised,  that  a  Blight  misdescription,  of  their  pla< 
business,  made  in  the  schedule,  and  notice  of  the  day  of  hearing  the  pe- 
tition of  the  insolvent,  if  the  notice  has  been  actually  served,  at  their 
place  of  business,  will  not  enable  them  to  dispute  the  insolvent's  dis- 
charge,  after  it  has  been  ordered,  although,  by  I  A:  2  Vict.  c.  110,  b.  69, 
the  insolvent  is  bound  to  deliver  a  Bohedule,  containing  a  full  and  true 
description  of  his  debts,  and  of  all  and  every  person  to  whom  he  was 
indebted,  and  although  the  banker-  never,  in  fact,  got  the  notice. (7) 


[*340]  *CHAPTEH    XII. 

THE  RELATIONS  OF  SOCIETIES,  ETC.,  AND  OF  PERSON-  1  I  l.l.l  Mi  REPRE- 
SENTATIVE CHARACTERS,  TO  RANKERS  GENERALLY,  AND  TO  THE 
BANK   OF   ENGLAND. 

Questions  occasionally  arise  on  the  connection,  in  pecuniary  matters, 
between  bankers  and  Friendly,  and  other  societies,  charities  and  public 
bodies,  and  also  between  bankers  and  trustees,  executors,  directors,  &c, 
which  are,  perhaps,  not  always  readily  capable  of  solution,  by  reference 
to  the  principles  which  have  been  shown  to  apply,  where  the  question  is 
between  a  bank  and  a  customer,  with  whom  they  deal  in  his  individual 
capacity.  It  has,  therefore,  been  considered  to  be  desirable  to  place 
together,  for  facility  of  reference,  some  leading  decisions  as  to  these 
matters,  especially  as  regards  transfers  of  stock,  shares,  dividends,  &c. 

Treasurers  of  Societies,  &c. — The  members  of  banks,  individually  or 
collectively,  frequently  undertake  the  duties  of  treasurers  to  societies,  trus- 
tees, commissioners,  and  other  public  bodies,  and  several  decisions  have 
been  made  pointing  out  their  rights  and  liabilities  in  such  cases,  as  well 
as  where  public  bodies  are  mere  customers ;  which  it  is  necessary  to  state, 
fur  their  guidance,  in  assuming  these  offices,  and  in  dealing  with  such 
bodies. 

The  first  case  we  shall  mention,  is  one  rather  bearing  on  this  subject, 
than  one  in  which  the  bankers  were;  regularly  made  the  treasurers  of  the 
public  body. 

Win-re  an  Enclosure  Act  empowered  certain  commissioners  to  make  a 
rate  to  defray  the  expenses  of  passing  and  exi  cuting  the  act,  and  enacted 
that  persons  advancing  money  to  them,  should  be  repaid  out  of  the  first 

r^mil  1I1""'.V  raised}  and  ^expenses  were  incurred  in  execution  of  the 
L  -I  act,  before  anj  rate  was  made,  the  commissioners,  to  defray  these 
.  drew  drafts  on  their  bankers,  requiring  them  to  pav  the  sums 
then  in  mentioned,  on  account  of  the  public  drainage,  and  to  place  the 
same  to  their  account  "  commissioners.  The  bankers,  for  six  yi 
continued  to  advance  considerable  sums,  h\  paying  these  drafts. 

Brown,  Jan  on  and  others  r.  Thomp  on,  25  L.  J..  C.  1L  Do. 


RELATIONS    OF    SOCIETIES,    ETC.,    TO    BANKERS.      251 

Here  it  was  held,  that  the  commissioners  were  personally  responsible, 
to  the  bankers,  for  the  amounts  drawn  for.(a)  It  was  held  also,  on  its 
being  shown  to  be  a  general  practice  with  the  bankers  to  make  half- 
yearly  rests,  in  the  accounts  of  their  customers,  and  to  charge  interest 
upon  the  balances  then  struck,  and  that  they  had  done  so  in  their 
accounts  with  the  commissioners,  who  had  assented  to  such  mode  of 
keeping  the  accounts,  that  the  bankers  were  entitled  to  interest,  reckoned 
in  this  mode,  upon  the  several  sums  advanced  by  them. (a) 

Some  paving  commissioners  make  a  banker  their  treasurer,  without  any 
written  appointment.  Their  private  act  gave  them  power  to  sue,  by 
their  clerk,  for  any  debt  due,  from  any  treasurer,  or  other  person  ap- 
pointed by  the  commissioners  to  receive  money,  or  his  assignees,  in  case 
of  his  becoming  bankrupt,  with  money  of  the  commissioners  in  his  hands, 
and  that  his  assignees  should  pay  such  debt  in  full,  in  preference  to  all 
other,  except  crown  debts.  Here  it  was  held,  as  might  have  been  ex- 
pected, that  the  commissioners  might  sue  by  their  clerk,  the  assignees, 
and  recover  the  amount  of  their  money  in  the  banker's  hands,  at  the 
time  of  the  bankruptcy  of  the  banker ;  and  also  that  the  assignees  were 
liable,  as  standing  in  the  place  of  the  banker,  for  the  whole  of  the  pro- 
duce of  certain  Exchequer  Bills,  which  the  banker  had  received,  from 
the  commissioners,  *and  afterwards  sold,  without  having  paid  po^n 
over  the  produce,  before  becoming  bankrupt,  (h)  «-         J 

When  one  of  the  partners  in  the  banking  house  of  Sir  Claude  Scott, 
was  treasurer  of  the  Marylebone  and  Finchley  Koads  Trust,  and  ad- 
vanced to  the  chairman  of  the  trustees,  who  applied  to  him  for  such 
advance,  by  way  of  temporary  loan,  for  the  purposes  of  the  trust,  a  sum 
of  2,000?.,  which  the  partner  placed  to  the  credit  of  the  trustees,  it  was 
held,  that  the  money  not  having  been  borrowed  on  the  credit  of  the  tolls, 
as  prescribed  by  the  private  acts  relating  to  the  trust,  the  chairman  was 
personally  liable. (o) 

The  Commissioners  under  an  act  of  Parliament  for  lighting  and  paving 
the  city  of  Carlisle,  were  authorized,  by  writing  under  their  hands  and 
seals,  to  elect  and  appoint  a  treasurer. 

John  Forster,  one  of  the  members  of  a  banking  house  in  that  city,  was 
nominated  treasurer,  by  an  order  of  the  commissioners,  entered  in  their 
book  of  proceedings,  and  signed  by  the  chairman ;  but  the  appointment 
was  not  made  by  any  writing  under  the  hands  and  seals,  &c,  as  required 
by  the  act,  nor  was  Forster  ever  required  to  give  any  security  under  the 
act,  for  the  due  execution  of  the  office  of  treasurer.  He  continued,  how- 
ever, up  to  the  time  of  the  bankruptcy  of  the  house  to  act  as  treasurer, 
that  is  to  say,  that  the  collector  of  the  commissioners  pays  all  sums  re- 
ceived into  the  banking  house,  but  the  cheques  of  the  commissioners  pur- 
port to  be  drawn  on  Forster,  individually  as  treasurer:  they  are  not 
however,  presented  to  him,  or  paid  by  him,  but  by  the  banking  house. 

(a)  Eaton  v.  Bell,  5  B.  &  Ad.  34.  The  form  of  the  cheqque  adopted  seems  to 
have  been  defective,  in  not  mentioning  the  place  where  drawn  ;  sec  S.  C.  Eaton 
v.  Bell  followed  Horsley  v.  Bell,  Ambl.  771  ;  S.  C,  1  Bro.  C.  C.  101,  n. 

lb)  Frost  v.  Bolland,  8  Dowl.  &  R.  384 ;  Dougap  v.  Bolland,  5  B.  &  C.  G22. 

(c)  Parrott  v.  Eyre,  3  Moo.  &  Sc.  857  ;  S.  C,  10  Bing.  283. 


252  GRANT    ON    TIIE    LAW    uF    BANKING. 

Under  these  oircumstanoe,  the  commissioners  «  ere  not  allowed  to  prove, 
for  t lie  moneys  which  they  had  in  the  hands  of  the  bankero,  at  th.-  time 
of  the  bankrnptoy against  the  separate  estate  of  Forster,  but  only  to  oomc 

in  as  creditors,  against  the  joint  estate  of  the  firing/) 

*In  dealing  with  joint  stock  trading  companies,  it  is  material 
L  -I  for  bankers  before  they  make  advances,  t<>  ascertain  whether  th. 
directors  who  represent  the  company,  by  the  constitution  of  the  parti- 
cular company,  have  power  to  borrow  money;  if  they  have  not,  such 
advances  will  not, -generally,  be  recoverable  from  the  company,  as  a 
debt.(>) 

( 'uinmissioners  were  appointed  by  act  of  parliament,  for  improving,  &c, 
the  harbour  and  the  navigation  of  a  river,  running  into  the  harbour; 
they  were  empowered  to  levy  rates  and  duties  on  vessels  entering  the 
harbour,  and  also  tolls  on  vessels  navigating  the  river.  A.  and  B.  carried 
on  business  in  partnership  as  bankers,  and  A.  being  appointed  treasures 
to  the  commissioners,  the  moneys  arising  as  above,  were  paid  to  him,  and 
were  by  him,  from  time  to  time  deposited  in  the  banking  house ;  the 
account  of  sums  received  in  respect  of  the  harbour,  was  kept  separate  by 
desire  of  the  commissioners,  from  the  account  of  sums  received  in  resped 
of  the  river,  and  the  cheques  of  the  commissioners  were  headed  accord- 
ingly, as  the  money  was  required  for  the  one  purpose  or  the  other.  A. 
afterwards  died,  and  no  person  being  appointed  treasurer  in  his  stead; 
and  13.  carrying  on  the  business  alone,  the  moneys  of  the  commissioners 
were  paid  in  as  before ;  and  on  the  bankruptcy  of  B.,  it  was  held  that 
a  debt  due  from  him,  on  one  of  the  accounts  might  be  set  off,  against  a 
debt  due  to  him  on  the  other. (/) 

Friendly  Societies. — By  the  rules  of  a  friendly  society,  which  had 
been  duly  allowed,  certified,  confirmed,  ami  enrolled  under  the  Friendly 
9  ties  Acts,  it  was  provided  that  there  should  be  appointed  a  treasure! 
or  treasurers,  in  whose  hands  should  be  deposited  all  the  cash  belonging 
to  the  society,  until  the  same  can  be  placed  out  on  interest,  upOD 
L  '  J  *satisfactory  security;  and  that,  as  soon  as  a  sufficient  sum 
should  be  colledted,  it  should  after  leaving,  in  the  club-box  a  sufficient 
sum  to  pay  the  sick,  and  other  expenses  of  the  society,  be  deposited  in 
the  hands  of  the  treasurer  or  treasurers  of  the  society,  and  that  the  clerk 
and  two  stewards  should  take  the  same  to  the  bank,  &C. 

By  the  present  Bankrupt  Act,  VI  &  L3  Vict.  e.  L06,  s.  167,  it  is 
enacted,  that  if  any  person  already  appointed  or  employed,  or  who  may 
be  hereafter  appointed  to,  or  employed  in  any  office  in  any  society. 
established  under  any  of  the  acts  relating  to  friendly  societies,  and  being 
entrusted  with  the  keeping  of  the  accounts,  A.<-.,  shall  become  bankrupt, 
the  court  shall  oo  application  of  the  society,  &c.,  order  payment  and 
delivery  over,  to   be    made   to   the   sceiety,  &C,  of  all  moneys  and  other 

things  belonging  to  the  Bociety,  and  also  payment  of  all  moneys  remain- 
ed) Kx  parte  Dobinson,  2  M.  D.  <v  De  G.  341. 

i.     parte  Chippendale,  4  De  G.  M.  .v  <i.  L9j   I'-urmester  v.  NorrU,  6  Exch. 

(/)  Bi  parte  Pearce,  2  M.  \f.  k  De  G.  l  L2. 


RELATIONS    OF    SOCIETIES,    ETC.,   TO    BANKERS.      253 

ing  due,  which  the  bankrupt  received  by  virtue  of  his  said  office  or 
employment,  before  any  other  of  his  debts  are  paid  and  satisfied. 

Money  belonging  to  a  friendly  society  had  been  lodged  in  the  hands 
of  certain  bankers,  who  afterwards  became  bankrupt,  with  a  sum  of 
1321.  Os.  lid.,  of  the  society's  moneys  in  their  hands,  and  this  money 
they  were  alleged  to  hold,  not  as  bankers  of  the  society,  in  the  ordinary 
way  of  their  banking  business,  but  wholly  as  treasurers  of  the  society. 
It  was  not  alleged  that  the  bankers  had  been  appointed  to  be  treasurers, 
or  officers  of  the  society,  but  only  that  they  were  employed  in  the  office 
as  treasurers  of,  and  in  the  society. 

The  commissioner  having  refused  to  make  an  order,  for  payment  in 
full,  of  the  above  sum,  the  lords  justices  dismissed  with  costs,  an  appeal 
from  his  decision,  considering  the  bankrupts  not  to  have  been  employed 
in  any  office,  within  the  provisions  of  the  Bankrupt  Act.(#) 

*  Savings'  Banks. — With  respect  to  the  liabilities  of  bankers,  r^o^en 
as  treasurers  of  savings'  banks,  the  following  instance  may  be  *-  J 
useful. 

A.  was  appointed  treasurer  of  a  savings'  bank,  being  at  that  time,  a 
partner  in  a  banking  house.  The  only  account  between  the  institution 
and  the  banking  house,  stood  in  the  names  of  the  trustees  of  the  savings' 
bank,  who  drew  upon  the  banking  house  in  the  usual  mode,  as  between 
banker  and  customer,  by  cheques,  without  any  intervention  on  the  part 
of  the  treasurer,  who,  except  as  being  partner  in  the  bank,  never  received 
or  paid  any  money,  on  behalf  of  the  savings'  bank.  On  his  appointment, 
however,  he  entered  into  the  usual  bond  with  a  surety,  and  the  trustees 
and  treasurer,  for  twenty  years,  uniformly,  in  the  annual  returns  repre- 
sented to  the  commissioners  for  the  reduction  of  the  national  debt,  that 
the  last  balance  of  the  institution,  for  the  time  being,  was  in  the  hands 
of  the  treasurer,  in  that  capacity,  and,  therefore,  represented  it  as  being 
under  the  protection  of  3  &  4  Will.  IV.  c.  14,  s.  28  (one  of  the  statutes 
relative  to  savings'  banks,  at  that  time  in  force,)  and  also  under  the  pro- 
tection of  the  board. 

At  the  end  of  the  above  period,  the  banking  firm  became  bankrupt ; 
and  it  was  held  that,  at  that  time  the  balance  was  in  the  hands  of  A.,  as 
treasurer,  and  might  be  recovered  in  full,  by  the  trustees  of  the  savings' 
bank,  out  of  his  separate  estate.  It  was  considered  to  be  unnecessary  to 
decide,  whether  the  banking  firm  was  also  jointly  liable  to  the  trustees; 
but  the  trustees  of  the  savings'  bank,  were  held  liable  to  the  costs  of 
the  proceeding,  as  having  allowed  of  irregularities  in  conducting  the 
business  of  the  institution. (A) 

(a)  Ex  parte  Orford,  De  G.  M.  &  G.  Bank.  Rep.  83 ;  see  Ex  parte  Harris,  De  G. 
Bank.  R.  162  ;  Ex  parte  Whipham,  3  M.  D.  &  De  G.  564 ;  all  cases  where  the  so- 
ciety, &c,  was  only  on  the  ordinary  footing  of  customer  of  the  bank  ;  Ex  parte 
Riddell,  3  M.  D.  &  De  G.  80,  is  detailed  above,  p.  345  ;  and  is  the  case,  where  one 
member  of  a  banking  firm  was  appointed  treasurer  of  a  savings'  bank  and  on  the 
bankruptcy  of  the  firm,  the  savings'  bank  was  held  entitled  to  have  the  whole  of 
the  moneys  of  theirs,  in  his  hands,  repaid  in  full :  see  Ex  parte  Appach,  1  M.  D.  & 
De  G.  83. 

(h)  Ex  parte  Riddell,  3  M.  D.  &  De  G.  80. 


254  GRANT    ON    THE    LAW    OF    BANKING. 

r*3J  ' l  ^Treasurers  of  Corporations. — An  incorporated  company. 
L  '  -I  authorized  by  their  private  act  to  appoint  a  treasurer,  from  whom 
they  were  required  to  take  security  by  bond,  in  a  sufficient  penalty,  for 
the  faithful  execution  by  such  treasurer  of  such  office  \  Dilworth  &  Co., 
bankers,  in  partnership,  were  duly  elected  treasurers,  and  the  members 
of  the  firm  jointly  and  severally  humid  themselves,  in  a  penalty  of  20,0002., 
for  the  due  performance  of  the  duties,  &o.,  and  also  to  pay  all  balances, 
&c.,  to  the  company,  when  thereunto  required  by  the  said  company. 
Dilworth  &  Co.  afterwards  became  bankrupt,  with  a  large  balance  belong- 
ing to  thf  company  in  their  hands. 

But,  notwithstanding  that  it  was  shown  that  the  account  was  kept,  in 
most  respects  with  the  bankers  as  treasurers,  and  not  as  a  banking 
account  is  ordinarily  kept,  with  a  customer,  yet,  there  having  been  no 
demand  made  by  the  company,  to  pay  over  the  balance,  in  the  hands  of 
the  bankers,  before  the  bankruptcy,  and,  consequently,  no  breach  of  th«' 
condition  of  the  bond,  the  Court  of  Chancery  held  the  company  dis- 
abled from  proving  against  the  bankers  undt  /■  the  bond,  either  jointly  or 
separately.  (<") 

Trustees,  Executors,  &c. — For  the  guidance  of  trustees,  executors, 
and  other  persons  filliug  representative  characters,  in  dealing  with 
bankers  and  vice  versa,  it  will  be  proper  to  state  some  principles,  with 
brief  illustrations. 

If  the  executors  and  trustees,  under  a  will,  having  contracted  to  pur- 
chase  land,  sell  out  stock,  just  before  the  time  at  which  the  purchase 
seems  to  be  completing,  and  deposit  the  proceed-^,  intending  merely  a 
temporary  deposit,  in  the  banking  house  with  which  the  testator,  for 
many  years  hail  kept  an  account,  and  the  principal  clerk  in  which  had 
been  his  confidential  adviser  in  pecuniary  affairs,  they  cannot  be  held 
in  equity,  to  be  responsible,  if  the  bank  fails  with  the  deposit  in  its 
possession,  (/r) 

r*3i~n  But  it  must  not  be  too  hastily  concluded  that,  in  all  ca 
L  J  where  no  fraud  or  gross  negligence  can  be  imputed,  agents,  &0., 
arc  freed  from  responsibility.  Thus,  it  has  been  held,  that  any  agent, 
even  an  agent  acting  gratuitously,  who  pays  money  of  his  principal,  evei 
with  knowledge  of  the  principal,  into  his  (the  agent's)  banker's,  to  his 
own  account,  there  mixing  it  with  his  own  moneys,  this  last  circum- 
stance not  being  shown  to  be  known  to  the  principal,  LS  liable,  on  failure 

of    the   bank.|/j 

.  an  assignee  of  a  bankrupt  paying  in  money  mixedly  to  his  own 
account,  without  denoting  it  as  money  of  the  estate  in  a  separate  account, 

is  liable  on  the  bankruptcy  of  the  bankers. (/) 


-    K-  part*   Lancaster  Canal  Company,  Mont.  R.  li  to  construction 

ol  similar  condition,  Kx  parte  Fairlie,  id.  17. 

France  v.  Woods,  Taml.  U.  IT'J:  see  Lord  Dorchester  v.  Earl  of  Effingham, 
id.  279;  Etowtfa  v.  Bowell,  3  Ves.  565 j  Knight  r.  Karl  of  Plymouth,  ::  Atk.  480; 
Adams  v.  Claxton,  6  Ves.  226;  Wren  v.  Kirton,  11  W.-.  311.  Bo  if  the  bank  is 
robbed  ol  the  money :  Jones  v.  Lewis,  2  Ves.    en.  241. 

■ ;.  v.  Banner,  l  Jac.  k  W.  241,  248;  Bee  Pennell  v.  Deffell,  4  Do  (:.  M. 
Pah-lie  v.  Freeman,  3  Meriv.  10,43;  Napier  v.  Staples,  2  Molloy, 


RELATIONS    OF    SOCIETIES,    ETC.,    TO    BANKERS.       255 

The  rule  generally  applicable  to  dealings  of  trustees  with  banks,  has 
been  sometimes  put  thus :  if  a  trustee,  &c,  deposits  trust  money  in  a 
bank  of  good  credit,  he  is  exonerated  if  the  bank  fail  with  the  money 
in  its  possession,  (m)  But,  probably,  it  would  be  difficult  to  assign  any 
very  precise  meaning  to  these  terms ;  and  in  fact  the  requirement  seems 
to  be,  that  the  trustee,  agent,  &c,  shall  act  with  as  complete  bona  fides, 
and  therefore  with  as  much  circumspection  and  care,  as  any  prudent  man 
would  do  in  the  transaction  of  his  own  business.  Now,  a  person  paying 
another's  money,  intrusted  to  his  keeping,  into  a  banker's,  niixedly  with 
his  own,  cannot  be  said  to  act  in  the  required  manner ;  for  the  trust 
money  thereby  becomes  liable  to  any  set-off  that  the  banker  may  have 
against  the  trustee  :  if  the  banker  fails,  the  cestui  que  trust  is  left  with- 
out any  mode  of  ^showing  for  how  much  he  is  entitled  to  prove  r#g^g-i 
against  the  bankrupt's  estate :  if  the  trustee  fails,  the  whole  of  L  -I 
the  sum  which  stands  to  the  trustee's  credit  in  the  banker's  books,  goes 
to  the  assignees  :  if  the  banker's  course  of  business  is  to  pay  interest  on 
money  deposited,  the  trustee  makes  advantage  of  the  cestui  que  trust's 
money,  by  having  the  interest  debited  to  him  :  and  lastly,  he  obtains 
credit,  from  the  largeness  of  the  balance  in  his  favour  at  his  bankers,  so 
that  it  has  been  held  to  be  an  employment. of  money  in  trade,  where 
the  trustee  was  a  person  engaged  in  trading,  and  so  deposited  trust 
money.  (ii\ 

So,  an  attorney  paying  in  client's  money  to  his  bankers,  to  his  own 
account,  mixing  it  with  his  own,  is  liable  on  the  failure  of  the  bank,  to 
pay  the  whole  to  the  client,  (o) 

If  an  attorney,  employed  to  get  in  assets,  &c,  in  the  country,  and 
remit  to  town,  procure  a  bill  of  exchange,  drawn  by  a  banker  on  his  cor- 
respondent in  London,  but,  by  mistake,  made  payable  to  his  order,  so 
that  it  becomes  necessary  for  him  to  indorse,  he  is  not  personally  liable 
as  indorser,  either  to  the  indorsee,  or  to  the  bankers  with  whom  this  bill 
may  have  been  deposited,  for  purpose  of  presentment  for  payment,  &c.(p) 
A  sole  executor  and  trustee  of  the  residuary  personal  estate  and  effects 
of  the  testator,  in  trust  for  his  widow,  for  her  life,  and  after  her  decease 
to  pay,  or  otherwise  divide  the  same  in  equal  shares  amongst  his  chil- 
dren, pays  300?.,  part  of  the  assets,  into  an  old  established  banker's,  at 
Chichester,  who  had  for  many  years  been  his  own  bankers,  with  a  direc- 
tion in  writing  to  invest  the  money  in  consols  in  his  name,  for  the  pur- 
poses of  the  trust.  Instead  of  doing  so,  the  bankers,  without  his  know- 
ledge, open  a  new  account  with  him,  in  which  they  give  him  credit  for 
300?.,  the  executor  *and  another  person,  his  partner,  having  a  p-349-1 
joint  account  with  the  bank,  in  which  no  notice  of  the  300?. 
appeared.     The  executor,  relying  that  the  investment  had  been  duly 

270  ;  per  Lord  Lyndhurst,  3  Cla.  &  F.  66 ;  Melland  v.  Gray,  2  Coll.  Ch.  R.  300  ; 
see  Sidn.  Smith's  Chanc.  Prac.  440,  5th  edit. 

(m)  Belcher  v.  Parsons,  Ambl.  219 ;  S.  C,  1  Ld.  Keny.  38. 

(n)  Rocke  v.  Hart,  11  Ves.  61 ;  Ex  parte  Hilliard,  1  Ves.  jun.  91,  and  cases  there 
cited;  Melland  v.  Gray,  2  Coll.  Ch.  R.  301. 

(0)  Robinson  v.  Ward,  Ry.  &  M.  274 ;  2  Car.  &  P.  59. 

(p)  Kidson  v.  Dilworth,  5  Price,  564. 

February,  1857. — 18 


256  GRANT    OX    THE    LAW    01    BANKING. 

made,  never  called  fur  die  transfer  note,  or  made  any  other  inquiry,  and 
remained  in  ignorance  that  the  investment  had  not  been  made,  until  the 

hanker-  became  bankrupt,  a  period  of  marly  live  months.  The  execu- 
tor proved  t'"r  the  300/.,  under  the  fiat,  and  insisted  that  lie  was  net 
bound  t<>  account  for  more  than  the  dividend  received,  alleging  that  the 
employment  of  hankers  was  the  necessary,  and  only  course  available  to 
a  person  resident  in  the  country,  to  invest  money  in  the  government 
funds;  hut  he  was  decreed  to  pay  the  whole  300?.,  with  interest,  at  four 
per  cent.,  and  costs. (5) 

Payment  by  hankers  to  one  of  several  trustees,  of  the  proceeds  of 
stock,  sold  out  under  a  joint  power  of  attorney  from  the  trustees,  does 
not  discharge  the  bankers,  as  against  the  other  trustees,  unless  the  one 
trustee  lie  authorized  by  the  others,  or,  perhaps,  unless  to  pay  to  one  be 
the  usual  course  of  business,  (r)  At  law,  when  trustees  all  join  in  a 
receipt,  prima  facie  all  are  considered  to  have  received  the  money  ;(s) 
but  executors  nut  being  hound  to  join  in  a  receipt,  if  they  do,  whether 
they  are  all  liable,  will  depend  on  their  having  acted. (/) 

A  will  contained  the  usual  clause,  that  the  trustees  should  not  be 
liable  for  any  loss  or  damage  which  might  happen,  without  their  wilful 
default,  or  by  the  misfeasance,  failure,  or  insolvency  of  any  banker  with 
whom  the  trust  moneys  might  be  lodged  for  safe  custody,  ot  investment, 
or  otherwise,  in  the  execution  of  the  trusts. 

There  were  three  executors  and  trustees  of  the  will,  one  of  them  being 
the  testator's  brother,  to  whom  a  moiety  of  the  residuary  property  \\a> 
r  or/yi  given  o\.t  absolutely,  in  the  *event  of  the  testator's  infant 
L  J  daughter  dying  under  age,  and  unmarried.  The  trusts  were, 
inter  alia,  to  convert,  with  all  convenient  speed,  such  parts  of  the  tes- 
tator's persona]  estate  as  should  not  consist  of  money,  and  to  invest  the 
surplus,  &C.,  in  some  parliamentary  stock. 

A  banking-house  which  had  been  employed  by  the  testator,  continued 
to  be  employed  after  his  death  by  the  trustees,  as  the  bankers  of  the 
trust  estate  ;  the  house  failed,  and  the  trustees  were  held  to  be  personally 
chargeable,  with  the  loss  of  a  sum  of  trust  money,  which  they  had 
allowed  to  remain  an  undue  length  of  time  in  the  bankers'  hands, 
instead  of  investing  it,  and  with  which  in  their  hands,  the  bankers 
failed,  (it) 

So,  where  executors  advanced  to  their  banker--  put  of  the  testator's 

assets    upon    the    personal    security  of   the    bankers,  who    appear    to    have 

given  accountable  receipt  notes,  bearing  interest,  for  the  money,  which 
was  to  be  distinct  from  the  general  account  current,  they  were  held 
liable  for  the  loSS.(x) 

(q)  ChaUen  v.  Sbippam,  i  Hare.  ."..'.:.  ■.  am!  see  S.  C.  reported  in  I r ill  on  Trustees, 

(r)  Stone  v.  Marsh,  l:. .  .-.  M   364  ;  jee  tones  \.  StephenBon,  l  Mv.  &  Rob.  l  15. 
rice  -. .  Stokes,  li  Vea.  319.  (I)  Joy  v.  Campbell,  I  Sch.  &  L.  341. 

(u)  Movie  v.  Moyle,  2  Rubs,  h  M.  710,  wbi  onvenience  of  arrangement 

that  all  thn  e    bonld  i  oncnr  in  signing  cheques,  id.  714. 

Darke  v.  Ifartyn,  I  Beav.  525;  Anon.,  Lofft.  R.  192  ;  Lewin  on  Trust.-:,  27.6; 
comp.  Wyatl  v.  Wallace,  Coop.  Rep.  Temp.  Cottenham,  L56.  Claim  of  banker 
creditor,  how  made  on  administration  summons,  Sidn,  Smith's  Eq.  Pract.  3G1. 


RELATIONS    OF    SOCIETIES,    ETC.,    TO    BANKERS.      257 

Executors,  being  merchants  and  copartners,  residing  at  Limerick,  had 
before  and  at  the  time  of  the  death  of  the  testator,  kept  an  account  with 
Robarts  &  Co.,  bankers,  in  England,  as  their  agents  and  correspondents, 
and  on  the  death  of  the  testator,  had  opened  another  and  separate 
account,  as  executors :  the  executors  being  greatly  overdrawn  in  account 
with  the  bankers,  the  latter  determined  to  apply  all  the  assets  of  the  tes- 
tator which  they  had  or  should  receive  by  virtue  of  the  power  of  attor- 
ney given  them  by  the  executors  for  that  purpose,  to  the  satisfaction  of 
the  separate  debt  due  from  the  firm  to  them  ;  they  accordingly  sold  out 
stock  of  the  testator,  and  instead  of  carrying  the  proceeds  to  the  exe- 
cutorship account,  they  carried  it  to  the  mercantile  ^account,  r^oRi-i 
and  they  then  closed  the  executorship  account,  to  the  credit  of  L  J 
which  there  was,  at  that  time,  a  considerable  balance  in  their  books : 
the  executors  having  at  the  time  full  notice  and  knowledge,  authorize 
the  bankers  by  power  of  attorney  to  collect  and  receive  the  assets. 

The  bankers,  remitting  the  amount  to  the  executors,  in  course  of  their 
duty  as  agents,  and  afterwards  applying  the  assets,  in  payment  of  the 
amount  of  such  remittances,  are  not  responsible,  in  respect  of  misappli- 
cation by  the  executors,  they  not  being  privy  to  any  intention  of  misap- 
plying the  assets  :{y\  and  it  seems  that  even  if  they  had  reason  to  believe 
that  the  executors  were  misapplying  the  money,  they  would  still  be  bound 
to  act  as  they  did ;  at  least  they  could  not  be  responsible  for  paying  over, 
to  the  principals,  mouey  placed  in  their  hands,  for  the  purpose  of  being 
remitted  to  thein.(_y) 

The  distinction  seems  to  be  this  :  if  a  banker,  employed  to  receive  and 
pay  over  the  assets  of  a  testator,  pay  them  over,  so  that  they  may  be  ap- 
plied to  the  purposes  of  the  will,  he  is  not  responsible  for  the  executor's 
misapplication,  but  if,  in  dealing  with  the  executor,  he  pays  the  assets, 
for  the  private  purposes  of  the  executor,  he  is  particeps  criminis,  in  a 
breach  of  trust,  and  he  is  equally  a  party  to  the  breach  of  trust,  whether 
he  applies  the  money,  to  the  debt,  or  to  the  trade  of  the  executor.(sr) 

If  bankers  of  trustees,  wrongfully  sell  out  stock  of  the  trustees,  and 
apply  it  to  their  own  purposes,  the  measure  of  their  liability  in  equity, 
is  the  sum  paid  in  replacing  the  stock. (a)  If  one  of  the  banking  firm 
sells  the  stock,  unknown  to  the  partners,  but  under  circumstances  such 
that  they  might,  by  the  exercise  of  proper  diligence  and  attention,  have 
discovered  it,  equity  will  impute  knowledge,  and  hold  them  all  liable. (a) 

*If  one  executor  places  the  testator's  money  in  the  hands  of  r^oKoi 
the  other,  who  happens  to  be  a  banker,  so  that  the  act  is  not  an  L 
improvident  act,  the  executor  depositing,  is  not  chargeable,  in  case  of  a 
loss,  inasmuch  as  if  he  had  been  sole  executor,  and  had,  under  the  same 
circumstances,  deposited  at  a  banker's,  he  would  not  have  been  liable. (b) 

If  three  executors  have  an  account  in  their  names,  with  a  banker,  and 
one  draws  a  cheque,  it  seems  the  bankers  may  refuse  to  cash  it,  if  they 
have  received  notice  from  one  of  the  others,  not  to  part  with  the  money. (c) 

{y)  Keane  v.  Robarts,  4  Mad.  332,  356 ;  see  Davis  v.  Sparling,  1  Russ.  &  M.  64. 
(z)  See  per  Sir  J.  Leach,  4  Mad.  358,  359.  («)  Sadler  v.  Lee, '6  Beav.  324. 

(b)  Chambers  v.  Miuchin,  1  Ves.  198;  Wms.  Exors.  1552. 

(c)  Gaunt  v.  Taylor,  2  Hare,  413. 


25S        GRANT  ON  THE  LAW  OF  BANKING. 

An  executor,  placing  money,  which  he  ought  to  have  invested,  in  his 
banker's  hands,  mixed  with  his  own  account,  is  liable  for  the  amount,  on 
the  failure  of  the  bankers. ((2) 

Receiver. — A  receiver,  under  an  order  in  chancery,  is  not  liable,  fur 
sums  deposited  with  a  banker  in  good  credit,  provided  there  is  nothing 
to  attach  fraud,  and  no  laches,  (.,-  if  he  has  left  the  money,  an  unwar- 
rantable time,  in  the  banker's  bands.)  on  the  failure  of  tin'  banker.  In 
such  a  case,  a  receiver  will  be  liable,  if  he  leaves  money  in  the  hands  of 
his  bankers,  and  receives  interest  npon  the  sums  so  deposited,  and  the 
bankers  fail.M 

Committees  of  Management,  <&c, — A  banker's  receipt,  of  deposits  paid 
in  respect  of  a  projected  railway,  &C.,ia  not,  necessarily  evidence  of  pay- 
ments of  the  deposits,  to  the  committee  of  management.  Thus,  where 
the  letter  of  allotment  stated,  "A  receipt  will  be  granted  by  the  bankers 
to  whom  the  deposit  is  paid,  which  will  be  exchanged  for  scrip,  \<\." 
and  a  list  of  banks  was  added;  it  was  held,  in  an  action  by  a  depositor, 
against  three  members  of  the  committee  of  management,  f< >r  money  had, 
and  received,  &c,  that  the  receipt  of  his  deposits,  given  him,  by  one  of 
the  banks,  in  the  *list,  was  no  evidence  of  bis  money  ever  having 
«-  J-l  come  to  the  hands  of,  or  ever  been  at  the  disposal  of  the  defen- 
dant-.^/) 

Stock  in  Public  Funds. — The  nature  of  stock  and  money  in  the  public 
funds,  is  this:  stock  is  a  chose  in  action  ;  it  has  no  locality,  except  for 
tlo-  purposes  of  probate  and  administration j  it  does  not  fall  under  the 
head  of  goods  and  chattels,  so  as  to  pass  by  a  grant  of  /,<,„, i  ,t  cataUa 
r',Im,, mi  ;(/i)  it  has  been  said  neither  to  be  a  chattel,  nor  to  have  any  re- 
semblance to  a  personal  chattel  ;(/)  it  cannot  be  sued  for  as  money,^A)  it 
does  not  pass  under  the  term  "money,"  in  awill;(/)but  it  does  pass 
under  the  term  "securities  for  money,"  unless  the  expression  be  con- 
trolled by  the  context  ;  it  is  doubtful,  it  seems,  whether  tin  same  is  true 
of  Bank  of  England  Stock. (m)  However,  stock  in  the  funds  has  been 
said  to  pass,  or  not,  under  the  word  "  moneys,"  or  the  word  "  goods,"  or 
the  word  "chattels,"  according  to  the  whole  context  of  the  will,  and  cither 
"goods,"  or  "chattels,"  used  simply,  and  without  qualification,  will  pass 
it  in   a  will;('«<j  and  where  the  testator  did  not  bank  with  the  Bank  of 

Fletcher  v.  Walker.  ::  Mad.  73 
(e)  I  ■  ' '  indesley,  8  Jar.  547. 

iv    Watson  v.  Karl  of  Charlemont,  \2  Q.  B 
l;.  \ .  <  Sapper,  5  Price,  217. 

Wildman  v.  WHdman,  9  Ves.  1  19  ;  see  6  Price,  :>•;:•.  •j*;.;.    Imf  they  are  "goods 
and  chattels"  within  tie-  reputed  ownership  clan  l  Vict.  c.  Li 

Brown   r.   I  Had.   53;   K\   parte  Richardson, Buck, 480.     Semble,  they 

Hre  not  or  commodities"  within  the  Bankrupt  Act.  12  .s;  13  Vict.  <-.  Li 

I  '■•  ■••  rville,  -  1'.  u 

Nightingale  \.  Devisme,  2  W.  Bla.  684;  nor  i-  "money"  in  a  contract,  con- 
vertible with  " stock ;"  Jonee  \.  Brinley,  l  I  5  II.  Lds.  268. 

rte  Simpson,  De  «;.  Bank,  K.  9 ;  Gordon  v.  Dotterill,  1  My.  k  K.  56;  21 
'-.I  ,(  banc,  i  '■■'■:  Willis  v.  Plaaket,  i  Beav.  208;  Douglas  v.  Congreve,  l  Keen, 
410:  Hotham  v.  Sutton,  15  Ves.  319;  but  set  r.  Thomas,  2  Keen,  8. 

(mj  Bescoby  v.  Pack,  l  Sim.  &  St.  500;  '-!  It  &  Wai 
(n)   Kendall  v.  Kendall,  4  Rush.  360. 


RELATIONS    OF    SOCIETIES,    ETC.,    TO    BANKERS.      259 

England,  a  bequest  of  »  all  my  money  in  the  Bank  of  England,"  passed 
stock  in  the  funds. (o) 

*The  Governor  and  Company  of  the  Bank  of  England  are  con-  r^or  t-\ 
stituted,  by  the  statute  11  Geo.  IV.  &  1  Will.  IV.  c.  13,  s.  10,  L  rf04J 
book-keepers,  with  respect  to  the  three-and-a-half  per  cent,  stocks,  created 
under  that  statute;  it  is  a  duty  which  they  owe,  to  all  the  persons,  who 
may  be  interested  in  the  fund,  so  to  keep  the  account,  as  that  it  may 
distinctly  appear,  at  all  times,  what  transfers  and  assignments  have  been 
made ;  and  a  person  who  once  has  had  stock  standing  in  his  name,  and 
afterwards  finds  it  does  not  stand  in  his  name,  has  a  right  in  equity,  if 
he  has  done  nothing  to  transfer  it,  to  have  it  replaced  by  the  bank.  An 
action  at  law,  it  is  said,  is  an  inadequate  remedy,  (p) 

If  any  person  shall  wilfully  make  any  false  entry  in,  or  wilfully  alter 
any  word  or  figure  in  any  of  the  books  of  account,  kept  by  the  Governor 
and  Company  of  the  Bank  of  England,  in  which  books  the  accounts  of 
the  owners  of  any  stock,  annuities,  or  other  public  funds,  which  now  are, 
or  hereafter  may  be  transferable  at  the  Bank  of  England,  shall  be  entered 
and  kept,  or  shall,  in  any  manner,  wilfully  falsify  the  accounts  of  such 
owners,  in  any  of  the  said  books,  with  intent,  in  any  of  the  said  cases,  to 
defraud  any  person  whatsoever ;  or  if  any  person  shall  wilfully  transfer 
any  share  or  interest  of,  or  in  any  stock,  annuity,  or  other  public  fund, 
which  now  is,  or  hereafter  maybe,  transferable  at  the  Bank  of  England, 
in  the  name  of  any  person,  not  being  the  true  and  lawful  owner  of  such 
share  or  interest,  with  intent  to  defraud  any  person  whatsoever,  every 
such  offender  shall  be  guilty  of  felony. (j) 

The  transfer  of  stock,  in  the  public  funds,  is  further  guarded,  by 
making  it  felony  to  forge  such  transfer ;  or  to  forge  a  power  of  attorney 
to  transfer,  or  to  receive  dividends  *thereon ;  or  to  effect  a  trans-  P355-1 
fer,  or  receive  dividends  thereon,  by  false  personation  of  the  L  l  -■ 
owner.  (»■) 

Moreover,  the  Court  of  Chancery  is  empowered  summarily  to  restrain 
the  Bank  of  England,  from  permitting  the  transfer  of  any  stock,  in  the 
Public  Funds,  or  from  paying  dividends  thereon. (s) 

Also  the  personating,  of  any  person,  who  is  an  owner  of  stock  in  Public 
Funds,  or  of  dividends  thereon,  and  thereby  endeavouring  to  transfer  the 
stock,  or  receive  the  dividends,  is  felony,  (t) 

Clerks,  or  any  person  employed,  or  intrusted,  by  the  Bank  of  England, 
wilfully  making  out  dividend  warrants,  for  a  greater  or  less  sum  than 
what  is  really  due,  with  intent  to  defraud  any  person  whatsoever,  are 
also  guilty  of  felony,  (w) 


son 

279-  1  PhiL  356.  As  to  bequest  of  bank  stock,  Lindgren  v.  Lindgren,  9  Beav. 
358  J  see  25  L.  J.,  Ch.  573.  \p)  Sloman  v.  Bank  of  England,  14  Sim.  486. 

(q)  11  Geo.  IV.  and  1  Will.  IV.  c.  66,  s.  5. 

(r)  11  Geo.  IV.  and  1  Will.  IV.  c.  66,  s.  6. 

\s)  5  Vict.  c.  5,  s.  4  ;  as  to  affidavit,  Ex  parte  Field,  1  Y.  &  C.  Ch.  1. 

(t)  11  Geo.  IV.  and  1  Will.  IV.  c.  66,  s.  7. 

(m)  11  Geo.  IV.  and  1  Will.  IV.  c.  66,  s.  9.  As  to  the  practice,  on  transfer  o.- 
stock,  see  Lawson,  Hist.  Bank.  177. 


2G0  GRAM     u.N    Till:    LAW     OF    BAKE  IK  6. 

An  indictment  for  forging  a  transfer  of  stock  is  good,  which  charges 
dsely  making,  forging,  and  counterfeiting,  a  transfer  of,  &c.,  with 
the  name  of  the  owner  thereunto  subscribed,  &c,  "  purporting  to  be  a 
transfer,  from  the  owner,  to  cue  William  West,  of  the  Stock  Exchange/' 
\r.,  and  then  Betting  out  the  forged  Instrument,  although  nowhere  show- 
ing that  the  stock  had  been  accepted,  1>\  the  alleged  transferor,  previous 
to  the  alleged  transfer,  nor  that  the  transfer  was  witnessed  according  to 
the  Btatutes,  or  the  rules  and  directions  of  the  Bank  of  England.(x)  It 
was  contended,  before  all  the  judges,  that  without  showing  this,  it  did 
not  appear  that  the  alleged  owner  was  legally  entitled,  which  by  the 
statute  he  was  not,  until  he  accepted;  but  the  judges  held,  nevertheless, 
as  above,  and  the  prisoner  received  sentence  of  death,  and  was  executed 
accordingly. 

r*DCfi-i  It  appears  to  be  the  practice,  that  dividend-  maybe  *received, 
L  J  at  the  bank,  before  the  stock  has  been  accepted)  and  that  it  is 
the  duty  of  the  clerk,  to  sec  the  acceptance  duly  made,  on  occasion  of 
paying  the  dividends:  in  general,  no  transfer  of  stock  can  be  made, 
according  to  their  practice,  until  it  is  accepted.  (V) 

Where  a  statute  declared  the  stock,  created  under  it,  to  be  transferable, 
as  the  act  directed,  and  not  otherwise,  and  then  enacted,  that  the  entries 
of  transfer  shall  be  signed,  by  the  parties  making  such  transfers,  &c, 
and  that  any  person  to  whom  such  transfer  shall  be  made,  shall  under- 
write his  acceptance  thereof,  and  that  no  other  method  of  transferring 
such  stock  shall  be  valid;  and  a  person  alleging  himself  to  be  holder  of 
stock,  brings  an  action  against  the  Bank  of  England,  for  not  paying  divi- 
dends, he  cannot  dispute  the  title  of  the  transferee,  on  the  ground  that 
such  transferee  has  not  underwritten  his  acceptance,  the  claimant  of  the 
dividends  having  himself  executed  the  transfer,  in  the  prescribed 
mode, (a)  and  pocketed  the  price  of  the  stock. 

The  statute  in  question  expressly  enabled  the  transferor  to  act  by 
attorney,  but  there  were  no  such  words  as  to  the  transferee  underwriting 
the  acceptance ;  however,  it  seems  always  to  have  been  the  practice,  to 
allow  of  the  latter  act  being  performed  by  attorney,  equally  with  the 
former. (u) 

At  law,  it  seems,  the  stock  vests,  by  the  transfer,  for  many  purposes, 
without  acceptance ; (6)  the  direction,  as  to  acceptance  of  this  statute, 
appears  only  to  have  reference  to  the  rights  of  the  transferee,  against  the 
bank.(c) 

(x)  Gadc's  case,  2  Leach,  Cro.  Ca.  732  ;  Transfer  Ticket,  id.  737  ;  see  observa- 
tion-, h  Q.  B.  705;  Rules  and  Regulations  of  1832,  Lawson'a  Hist,  of  Banking, 
180. 

(y)  2  Leach,  Cro.  Ca.  739.  Stamp  on  mortgage,  as  Becurityfor  the  transferor 
retransfer  of  stock ;  Sweet,  Supplement,  Bythew.  Conv.  253,  254. 

(z)  Foster  v.  Bank  of  England,  8  Q.  B.  sole  On  issue  joined,  whether  plaintiff 
was  owner  of  the  stock  or  not,  held  plaintiff  was  entitled  to  inspect  the  entry  in 
the  hunk  1  looks  respecting  the  transfer  of  this  particular  Btock,  but  that  entry  only, 
8.  C;  form  of  Mich  entry,  8.  0., id.  To;;.  In  an  action  I . \  transferor  against  trans- 
feree, clerk  from  hank  may  prove  signature  to  acceptance  ;  hank  books  need  Dot 
be  brought  op,  Mortimer  v.  If'Gallan,  6  II.  &  \V.  58. 
Q.  B.  703,  7o-l,  705. 

Leach,  0.  C  732;  8  Q.  B.  705. 

'c)  8  Q.  B.  700.     The  power  of  attorney  to  transfer  stock,  it  seems,  by  the  usage 


RELATIONS    OF    SOCIETIES,    ETC.,    TO    BANKERS.      201 

*If  any  person  shall  forge  or  alter,  or  shall  offer,  utter,  dis-  rj(.„, 
pose  of,  or  put  off,  knowing  the  same  to  be  forged,  or  altered,  L  &' J 
any  note,  or  bill  of  exchange,  of  the  Governor  and  Company  of  the 
Bank  of  England,  commonly  called  a  bank  note,  a  bank  bill  of  exchange, 
or  a  bank  post  bill,  or  any  indorsement  on,  or  assignment  of,  any  bank 
note,  bank  bill  of  exchange,  or  bank  post  bill,  with  interest,  in  any  of 
the  cases  aforesaid,  to  defraud  any  person  whatsoever,  every  such  offender 
shall  be  guilty  of  felony.  (d\ 

In  an  indictment,  on  this  statute,  though  it  would  be  incorrect  to 
describe  a  bank  post  bill,  as  a  "  bill  of  exchange,"  it  may  be  described, 
as  a  bank  bill  of  exchange. (e) 

With  respect  to  the  evidence  of  the  intent  to  defraud,  it  is  enough,  if 
the  jury  are  satisfied,  that  the  purpose  to  defraud  existed  in  the  mind  of 
the  accused,  when  he  did  the  act,  for  which  he  is  indicted,  although,  in 
fact,  no  person  was  defrauded ;(/)  or,  from  circumstances  not  known  to 
the  defendant,  it  was  impossible  that  any  person  could  have  been 
defrauded,(#)  (but  this  does  not  extend,  it  seems,  to  render  a  defendant 
liable  upon  an  instrument  which,  if  genuine,  would  have  been  void,(A)j 
or  the  person,  to  whom  the  forged  instrument  is  uttered,  believes  that 
the  defendant  did  not  intend  to  defraud  him;  at  any  rate,  where  to 
defraud  *this  person,  would  be  the  natural  consequence  of  the  ,fi 
act  of  uttering,  because  every  one  must  be  taken  to  contemplate  L  '  J 
the  necessary  consequences  of  his  own  act. (A 

A  forged  power  of  attorney,  as  has  been  observed,  has  no  effect  to 
transfer  stock  standing,  in  the  name  of  A.,  to  the  name  of  B. ;  conse- 
quently, since  it  is  clear  that  the  bank  is  liable  at  the  suit  of  A.,  if  it 
obeys  a  forged  power  of  attorney,  and  transfers  accordingly  :(k)  in. such 
circumstances  A.  may  recover  damages  against  the  bank,  for  not  making 
a  transfer,  from  A.  to  a  purchaser  of  a  part  of  the  stock,  or  of  the  whole 
of  it.  (A;) 

If,  however,  A.  had  known  of  the  forgery,  and  refused,  or  omitted  to 
apprise  the  bank  of  it,  such  conduct  would  disable  him  from  recover- 
ing.^) 

and  practice  of  the  bank,  is  revocable  by  a  stock  holder,  acting-  personally,  with- 
out deed  ;  R.  v.  Wait,  11  Price,  518;  S.  C,  7  Moo.  473  ;  see  Lawson's  Hist.  Bank- 
ing, 178  ;  Bromley  v.  Holland,  7  Ves.  28.  Stamp  on  bond  to  replace  stock  ;  Blair 
v.  Ormond,  14  Q.  B.  732  ;  on  mortgage,  as  security,  for  that  purpose  ;  Sweet,  Sup- 
plem.  Bythew.  Conv.  253.  Letter  of  attorney,  winch  is  part  of  security  for  money, 
is  not  revocable  ;  Abbott  v.  Stratton,  3  Jo.  &  L.  603.  An  authority,  coupled  with 
an  interest,  is  not  revocable ;  Gaussen  v.  Morton,  10  B.  &  G.  731  ;  see  8  Rep.  82. 

(d)  11  Geo.  IV.  and  1  Will.  IV.  c.  66,  s.  3.  As  to  signing  bank  notes  by  ma- 
chinery ;  1  Geo.  IV.  c.  92,  s.  3. 

(e)  R.  v.  Birkett,  Russ.  &  R.  251. 

(/)  R.  v.  Crooke,  Stra.  901 ;  R.  v.  Goate,  1  Ld.  Ray,  737. 

(ff)  R.  v.  Holden,  Russ.  &  R.  154;  Reg.  v.  Marcus,  2  Car.  &  K.  356. 

(h)  R.  v.  Wall,  2  East,  P.  C.  953,  in  case  of  a  will ;  R.  v.  Moffat,  1  Leach.  Cro. 
Ca.  431,  case  of  B.  of  Exchange. 

(t)  R.  v.  Shepherd,  Russ.  &  R.  16;  R.  v.  Harvey,  2  B.  &  C.  261;  Putting  v. 
Tucker,  4  B.  &  A.  382 ;  and  see  now  14  &  15  Vict.  c.  100,  s.  8. 

(k)  Coles  v.  Bank  of  England,  10  A.  &  E.  449;  Hume  v.  Bolland,  1  Cro.  &  M. 
130. 

(I)  Stracy  v.  Bank  of  England,  6  Bing.  754;  there  the  right  of  action  was  sus- 
pended by  the  act  of  the  plaintiff,  id.  773. 


262         GRANT  ON  THE  LAW  OF  BANKING. 

If  one  of  two  trustees  of  stock  forges  the  signature  of  his  co-trustee,  to 
a  power  of  attorney,  ;uh1,  under  it,  sells  out  stock,  and  absconds,  the 
bank  is  compellable,  in  a  court  of  equity,  to  re-invest  the  stock,  in  the 
name  of  the  other  trustee. (m) 

\  joint  tenant  of  a  BUBO  of  stock  cannot  legally  transfer  his  share;  for 
virtually,  at  least  in  the  ease  of  two  joint  tenants,  that  would  amount  to 
the  power  i<\'  transferring  the  whole  ;|  n\  and  if  the  survivor  of  two  trustees 
ofstock,  in  which  A.  was  beneficially  interested  for  life,  with  remainder 
to  B.,  dies,  leaving  B.  his  personal  representative,  and  J>.  voluntarily 
_  as  the  Btock  to  A.,  but  no  transfer  is  actually  made,  equity  will  not 
either  declare  B.  to  be  a  trustee  for  A.,  or  compel  a  transfer. (o)  It  is 
r*Q"Qn  reSar^C(l  in  *he  light  *of  an  imperfect  gift,  in  regard  to  which, 
L  J  the  donor  has  not  done  all  that  is  in  his  power  to  do.  It  is  dif- 
ferent, in  the  case  of  a  valuable  consideration,  for  the  assignment. 

Inspection  of  Books. — The  books  of  the  Bank  of  England  cannot  be 
inspected,  by  persons  who  have  no  interest  in  them,  or  who  seek  an 
inspection,  for  purposes  of  a  private  nature,  unconnected  with  the  objects 
for  which  the  books  are  kept. 

A  fund-holder  has  a  right  to  inspect,  and  copy  entries  relating  to  the 
stock  and  its  transfers,  &c,  in  which  he  is  interested;  but  he  has  only 
the  right,  as  to  the  particular  entries,  relating  to  the  particular  parcel 
of  Btock,  and  no  other  ;(p)  and  they  are,  accordingly,  liable  to  furnish 
a  list  of  such  of  their  books,  as  contain  entries  of  stock,  in  which  the 
party  applying  is  concerned,  and  the  Courts  of  Equity  enforce  this. (a) 

The  bank  books  are,  in  general  not  removable,  on  the  ground  of 
public  inconvenience,(r)  and  they  are  now  provable,  either  by  examined 
or  by  certified  copies,  (s) 

The  bank  books  are  the  best  evidence  of  the  transfer  of  stock,  but 
still,  it  was  not  always  necessary,  that  they  should  he  produced  to  afford 
this  proof;  the  signature  of  the  alleged  transferee,  might  be  proved,  by 
a  person  who  knew  the  party's  handwriting,  and  had  inspected  the  signa- 
r*'irrn  *ure  °^  acceptance,  &c,  in  the  books,  &c. ;(/)  but  it  was  *said, 
L  '  -I  when  the  question  is  whether  the  handwriting  itself  is  genuine, 
the  books  must  be  produced. («) 

Formerly,  it  was  obligatory  on  the  Bank  of  England,  by  certain 
statutes,  to  register  such  parts  of  every  will,  as  bequeathed  any  estate, 
property,  or  interest  in  any  public  stocks,  or  in  any  dividends  arising 

(m)  Sloman  v.  Bank  of  England,  I  I  Sim.  475.  (n)  14  Sim.  488. 

(o)  Beech  v.  Kempe,  18  Beav.  285. 

i /- 1  Poster  v.  Bank  of  England,  8  Q.  B  689.  stock  broker's  certificate,  when 
evidence  of  rands  In  books  of  Hank  of  England,  I  llvnn  v.  Bell,  2  Beav.  17  ;  see  Bre- 
ton v.  ('ope,  Peake  It.  30. 

fyi  Beslop  v.  Bank  of  England,  6  Sim.  192;  sec  l  Iferiv.  100;  Gough  v.  Davies, 
I  Price  200,  215. 

(r)  Mortimer  v.  M'Callan,  6  M.  &  W.  58,  87,  69;  Tayl.  Evid.  1233,  2nd  edit.;  R. 
..  Gordon,  DongL  572,  a.;  Davis  v.  Bank  o(  England,  2  Bing.  104. 
(»)   14  &  IB  Vict.  c.  99,  8.  14;  see  22  L.  J.,  Chano.  696. 

Mortimer  v.  M'Callan,  8  M.  ,v  w.  58.     Expenses  of  identification  at  bank; 

r,  Powell,  8  Beav.  488;  Davenport  v.  Powell,  ii  Sim.  275. 

loriol  v.  Smith  I  of  transferring,  BTopkinson  v.  Roe,  l 


RELATIONS    OF    SOCIETIES,    ETC.,    TO    BANKERS.      2G3 

therefrom  ;  but  by  a  later  statute, (#)  the  provisions  of  which  are  sub- 
joined, the  Bank  of  England  is  relieved  from  this  burden ;  and,  instead, 
it  is  now  made  sufficient,  if,  before  permitting  the  transfer  of  such  stocks, 
or  the  receipt  of  any  dividends  upon  stocks,  standing  in  the  name  of  any 
deceased  person,  they  register  the  name  of  the  deceased  person,  and  of 
his  executors,  or  administrators,  respectively,  as  the  case  may  be.  The 
probate  and  letters  of  administration  are  to  be  registered  as  formerly. 
Since  the  statute  referred  to  also,  all  stocks  in  the  public  funds,  standing 
in  the  names  of  any  deceased  person,  may  be  transferred  by  the  execu- 
tors or  administrators,  notwithstanding  any  specific  bequest  or  disposition, 
thereof  in  the  will. 

The  Bank  of  England,  however,  is  not  bound  to  permit  of  the  transfer 
of  the  stock,  or  the  receipt  of  any  dividends,  by  the  executors  or  admi- 
nistrators, until  the  probate  of  the  will,  in  the  first  case,  or  the  letters  of 
administration  in  the  other,  shall  have  been  left  at  the  Bank  of  England, 
for  the  registration  thereof.  But,  though  there  be  a  specific  devise,  the 
bank  are  bound  to  permit  the  executor  to  transfer,  unless  it  can  be  shown 
that  he  has  assented  to  the  legacy. (y) 

The  bank  may  also  insist  upon  all  the  executors,  who  shall  have  proved 
the  will,  joining  and  concurring  in  every  transfer  of  the  stocks,  or  of 
any  part  of  them. 

^Dividend  Warrants. — By  an  usage  of  bankers  and  mer-  pgg-m 
chants  in  London,  the  Bank  of  England  drafts  upon  their  cashiers  L 
for  the  payment  of  dividends  on  government  stock — commonly  called 
dividend  warrants — with  the  receipts  already  subscribed,  were  passed 
from  hand  to  hand,  like  promissory  notes  of  a  bank,  and  paid  by  the 
cashiers  of  the  Bank  of  England  to  bona  fide  holders,  after  a  certain  day; 
the  admission  of  the  payee  that  he  has  received  the  money  appearing  on 
the  document,  and  making  it,  as  far  as  the  bank  is  concerned  payable  to 
bearer  a  few  days  later  than  the  date  of  the  receipt.  But  it  has  been 
holden  by  the  Court  of  Exchequer  Chamber,  that  such  instruments,  on 
the  face  of  them,  not  being  negotiable  by  the  general  law  of  the  land, 
and  the  usage  not  immemorial,  so  as  to  be  capable  of  being  considered 
the  custom  of  the  city  of  London,  and,  therefore,  binding  upon  every 
one  in  the  city,  whether  he  knew  of  it  or  not,  did  not  form  the  only 
mode  by  which  dividends  were  payable.  Therefore,  if  A.,  an  owner  of 
government  stock,  gives  a  power  of  attorney  to  B.,  authorizing  him  to 
receive  and  give  receipts  for  the  dividends  thereon,  and  B.  gets  from  the 
bank  a  dividend  warrant  accordingly,  which  he  passes  for  good  consi- 
deration to  C,  who  requires  payment  of  the  dividends  by  the  bank  to 
him,  the  Bank  of  England,  it  seems,  are  not  compellable  at  law  to  pay 
C.  the  dividends,  and  could  not  on  that  ground,  resist  the  payment  of 
them  to  A.,  the  real  owner,  it  not  appearing  to  the  court  that  the  trans- 
action between  B.  and  C.  was  bona  fide,  as  regarded  G.,(z)  and  the  court 
doubted  whether  a  bona  fide  holder  could  compel  payment. (a) 

(x)  8  &9  Vict.  c.  97.  rHr 

(y)  Franklin  v.  Bank  of  England,  9  B.  &  C.  156 ;  S.  C,  1  Russ.  575  ;  b.  L.,  4  L. 

J    Chanc.  214;  and  as  to  costs.     In  that  case  the  practice  of  the  bank  was  upset. 
(z)  Partridge  v.  Bank  of  England,  9  Q.  B.  396.     Form  of  dividend  warrant,  id. 

406,  416.  («)  See  9  Q.  B.  426. 


264  .   \  N  1     0  N     THE    L  A  W     0  F    Ji  A  N  K  I  N  0. 

If  an  usage  had  been  established,  as  above  stated,  and  tin-  owner  of 
•k  had  been  oognisanl  of  the  usage,  and  *assented  to  it. 
L      "-I  it  might  be  that  he  could  nut  have  sued  the  bank,  though  they 
had  paid  C.(6) 

If  the  Bank  of  England  make  an  unreasonable  delay  in  passing  a 
power  of  attorney  for  the  transfer  of  stock,  they  are  liable  in  damagea 
for  any  loss  sustained  in  consequence;  they  arc  to  have  time  to  take  all 
reasonable  means  for  clearing  up  any  doubt  as  to  the  authenticity  of  the 
power  of  attorney,  which  they  may  reasonably  entertain;  but  it  is  tor 
the  jury  to  Bay,  whether  there  was  reasonable  cause  of  doubt,  and 
whether  reasonable  means  were  taken  to  ascertain  the  truth;  and  if 
they  negative  these  propositions,  there  must  be  a  verdict  for  the  owner 
of  the  stuck,  which  the  bank  have  unreasonably  delayed  the  transfer  of.(e) 

On  the  other  hand,  it  is  obvious  that  a  reasonable  delay,  according  to 
the  circumstances  of  each  case,  must  be  allowed  tu  the  Bank  of  England, 
in  order  to  investigate  the  claim,  because  the  property  in  stuck  is  not 
transferred  by  means  of  a  forged  power  of  attorney  to  the  name  of 
another  person  in  the  books  of  the  Bank  of  England;  and  they  are 
responsible  in  the  full  value,  or  to  replace  the  stock,  if  they  obey  a 
forged  power  of  attorney,  (</)  though  the  holder  may  disable  himself  by 
negligence  from  recovering. (e) 

This  being  the  ease,  it  follows, — and  it  follows  a  fortiori, — that  they 
are  responsible,  by  way  of  action,  if  they  refuse  to  transfer,  and  a 
mandumua  dues  not  therefore  go  to  compel  them  to  transfer.  (f\ 

\  power  of  attorney  to  transfer  stock,  has  been  held  to  be  a  deed 
within  '1  Geo.  II.  C.  25,  and  therefore  the  forging  of  it  was  a  capital 
felony,  (y) 

r*oeq-i  *In  an  action,  however,  against  the  bank,  for  the  nonpay- 
L  J  ment  of  dividends  in  the  three  per  cents,  &c.,  alleged  to  be  due, 
and  payable  to  the  plaintiff,  he  must  show,  and  prove,  that  the  money  to 
discharge  the  dividends  has  been  received  by  the  bank  from  the  govern- 
ment, for  the  bank  have  no  more  than  the  care  of  the  stock  ;  and,  it 
must  be  shown  that  they  have  funds,  before  they  can  be  proved  to  have 
committed  a  breach  of  duty,  in  not  paying  them  over  to  the  plaintiff. (A) 

Trusts. — The  Bank  of  England,  it  has  often  been  said,  does  not  take 
notice  of  trusts;  they  are  nut  to  look  beyond  the  legal  title;  therefure 
they  cannot  prevent  an  executor  Belling  out,  or  transferring  into  his  own 
name,(i)  and  are  nut  chargeable,  if  he  transfers  to  persons  not  entitled 
under  tin-  will.f'/-)  There  is  a  case  decided  in  relation  to  this  point,  a 
good  mauy  years  ago,  in  which  the  facts  were  these  : — 

fb)  Per  Parke,  J.,  I  B.  &  A.d.  605 ;  see  9  '.'.  B.  -ill,  412. 

Sutton  v.  Bank  of  England,  1  Oar.  .v  I',  la.:  ;  8.  <'.,  By.  k  M.  52  ;  see  9  J.  B 
If00.  771. 

(d)  Davis  v.  Hank  of  England,  2  Bing.  393  ;  S.  0.,  !•  J.  15.  Moo.  747,  774;  see  6 
Bing.  772.  '       •  v.  Bank  ol  England,  10  A.  &  E.  437,  449. 

(/)  It.  v.  Bank  of  England,  2  Dongl.  524  :  Oom,  Dig.  Action  on  the  Case,  A.  4. 

B.  v.  Fauntleroy,  2  Bing.  413. 
(h)  Bank  of  Engl  .-el  \.  he  i-.  5  B.  ft  0.  185;  1  Dowl.  &  R.  828  ;  see  10  A.  &  K. 
439,  449;  8  Q.  B.  690;  3  lr.  L.  K.  (N.  8.)  314. 
(i)  Bank  of  England  v.  Parson  see  8  Ves.  622. 

^  v.  Bank  of  England,  3  Ves.  55. 


RELATIONS    OF    SOCIETIES,    ETC.,    TO    BANKERS.      265 

A  transfer  was  made  of  stock  at  the  bank,  in  the  name  of  a  feme  covert, 
by  her  husband,  which  stock,  it  was  suspected,  she  held,  by  virtue  of  a 
trust  to  her  separate  use.  A  memorandum  was  made  by  the  bank  on 
the  transfer,  indicating  that  a  flaw  was  suspected  in  the  title.  This,  it 
was  held,  must  not  be  allowed ;  it  was  further  held,  that  no  secret  trust, 
as  against  the  party  having  open  legal  title,  will  affect  the  bank. 

Lord  Mansfield  added,  "  I  wont't  say  a  word  against  the  holder  of  the 
stock  having  his  action  against  the  bank,  for  disparaging  his  title. "(/) 

The  fact  is,  if  the  bank  looked  beyond  the  legal  title,  for  instance,  if 
they  took  notice  of  the  trusts  of  a  will,  they  must  be  held  to  take  notice 
throughout,  and  therefore  they  would  have  to  stand  the  consequence  of 
resulting  trusts,  and  such  *trusts  as  would  be  raised  by  a  court  r^fii 
of  equity  ;(m)  in  fact,  if  so,  they  would  be  charged  with  all  the  L  J 
trusts  in  the  kingdom. (-/A 

In  reality,  there  is  nothing  in  the  statutes  relating  to  the  establishment 
or  regulation  of  the  bank,  which  makes  them  trustees  of  the  public  funds 
for  any  person  ;  if  they  voluntarily  enter  in  their  books  a  trustee's  account, 
they  may,  under  certain  circumstances,  become  liable  for  the  obligation 
of  those  trusts ;  they  stand  much  in  the  same  relation  to  stock,  that  a 
depositary  of  goods  does  to  the  goods ;  if  they  have  notice  that  the  person 
in  whose  name  the  stocks  stand,  is  not  the  real  owner,  or  holds  subject 
to  a  claim,  and  they,  nevertheless,  allow  the  transfer  to  be  made,  there 
they  may  be,  but  then  only,  responsible  for  the  transfer. (o) 

It  is  common,  in  order  to  avoid  the  frequent  recurrence  of  the  neces- 
sity of  appointing  fresh  trustees — at  least  it  is  not  uncommon  when  the 
property  is  considerable — to  appoint,  in  the  first  instance,  four  trustees ; 
for  then,  on  the  decease  of  one,  or  even  of  a  second,  of  the  trustees,  there 
still  remains  the  check,  which  one  mind  may  be  supposed  to  have  over 
tendency  to  dishonesty  in  the  other. 

In  general,  it  is  a  rule  with  the  Bank  of  England,  not  to  allow  a  fund 
to  be  transferred  into  the  names  of  more  than  four  joint  owners. 

In  cases  of  a  special  character,  as  many  as  five  or  six  have  been 
admitted,  ex.  gra.  If  A.,  B.,  C.  and  D.  are  trustees  of  one  sum  upon 
certain  trusts,  and  were  also  trustees  of  another  sum,  upon  different 
trusts,  the  bank,  to  prevent  a  confusion  between  the  accounts,  will 
permit  the  transfer  of  one  sum  into  the  names  of  A.,  B.,  C,  D.  and 
E.(j>) 

When  an  account  at  a  banker's  is  opened,  with  two  or  *uiore  pgg^-i 
trustees,  it  is  safest  for  the  trustees  to  lay  down  the  rule  that  L  -" 
cheques  shall  not  be  valid,  unless  signed  by  all ;  this  is  not  always  prac- 
ticable, but  it  always  avoids  the  consequences  that  may  result  to  the  rest 
of  the  trustees,  who  have  allowed  one  or  more  of  the  body  to  take  the 
sole  management;  each  of  the  rest  will  be  personally  liable  for  any  loss, 

(I)  Lady  Mayo's  case,  Lofft's  R.  65. 

(m)  Bank  of  England  v.  Parsons,  5  Ves.  669 ;  see  3  Ves.  58. 
In)  3  Ves.  58. 

(o)  Humberstone  v.  Chase,  2  Y.  &  Col.  Ex.  209  ;  see  9  B.  &  C.  156;  1  Russ. 
575. 

(p)  Lewin  on  Trusts,  83,  2nd  edit. ;  Hill  on  Trustees,  452,  453. 


2G6  GRANT    ON    THE    LAW    OF    BANKING. 

if  he  has  diminished  the  Becurity  of  the  trust  fund  by  any  conduct,  or 
laches,  or  negligence  on  his  part.(y) 

Any  claimant  to  an  interest  in  Btock,  transferable  at  the  Bank  of  Eng- 
land, standing  in  the  name  of  any  other  person,  &c,  in  the  bank  books, 
who  is  desirous  to  restrain  the  transfer  of  Such  Stock,  or  to  restrain  the 
payment  of  the  dividends  thereof,  issues  a  distringas,  prepared  In  hu 
solicitor,  and  sealed  by  the  clerk  of  records  and  writs,  in  the  form  pie- 
scribed  in  a  late  statute. M  The  writ  is  then  to  be  served  on  the  Bank 
of  England,  together  with  a  notice  not  to  permit  the  transfer,  or  not  to 
pay  the  dividends,  as  the  case  may  be. 

That  a  person  has  obtained  a  disti  ingas  under  s.  5,  is  not,  per  sc,  an 
objection  to  his  also  obtaining  a  restraining  order  under  s.  4.M 

Such  restraining  order  continues  in  force  until  discharged,  after  a  bill 
has  been  filed  for  the  purpose  of  restraining,  &c.  ;(^)  or,  until  the  court 
varies  or  discharges  it.(») 

As  the  bank  can  look  only  to  the  legal  title  to  the  stock,  it  follows, 
that  they  cannot  pay  the  dividends  to  any  one  else  but  the  person  having 
the  legal  title,  under  any  circumstances;  the  following  is  a  strong 
example  of  this  : — 

A  testator  dies,  possessed  of  a  large  sum  in  the  funds,  a  sum  of  5,0007. 
of  which,  he  becpueaths  to  A. ;  this  stock  to  stand  in  the  name  of  the 
r*3f  PI  exocut°rs-  Then  a  judgment  is  *obtained  against  A.,  and  the 
L  -J  creditor  takes  out  a  judge's  order,  under  1  &  2  Vict.  c.  110,  ss. 
14  &  15,  charging  with  the  judgment  debt,  so  much  of  the  dividends 
only  as  was  payable  to  the  sole  use  and  benefit  of  A.  Accordingly,  the 
bank  refused  to  pay  the  dividends  upon  the  sum  of  which  the  testatoi 
died  possessed,  to  the  executors;  they,  therefore,  brought  an  action 
against  the  bank,  to  recover  one  half-year's  dividend  then  due;  and  the 
hank  applied  for  a  stay  of  proceedings,  on  payment  of  such  portion  of  the 
dividends  as  the  court  should  direct;  but  the  court  considered  the  appli- 
cation to  be  unnecessary;  because  the  bank  was  not  affected  by  the 
judge's  order,  which  bound  the  executors,  not  the  bank;  their  duty,  in 
such  case,  is  to  pay  the  dividends  to  the  executors,  the  legal  owners  of 
tie  ~tock,  who  are  answerable  in  equity  for  the  proper  application  of  the 
dividends, (V)  upon  the  production  of  the  judge's  order,  charging  the 
stock,  or  dividends. (y) 

The  statute  1  &  '1  Viet.  c.  110,  s.  14,  prevent-  any  proceeding  being 
taken,  to  have  the  benefit  of  the  charge,  until  after  the  expiration  of  six 
calendar  months  from  the  date  of  the  charging  order;  but,  nevertheless, 
the  Court  of  Chancery  will  make  a  stop  order  at  the  instance  of  the  credi- 

(y)  Williams  v.  Nixon,  2  Bcav.  475. 

(r)   5  Form  of  affidavit,   Orders,  1811;   Beav.  Ord.  Cane.  18C  ; 

Sian.  Smith.  Chanc.  Pract.,  5tfa  edit.  488. 

(*)   In  re  Man,,  of  Hertford.  1  Han-.  584  ;  S.  C,  1  Pliill.  129. 
(()  In  re  Harq.  of  Hertford,  l  PhilL  203.  Phill.  207. 

O)  Fowler  y.  Ohurchffl,  11  If.  .v.  if.  57,  323;  8.  0.,  2  Dowl.  N.  B.  767 ;   Bristed 
[king,  :;  Hai  Smitb  <r.  Ward.  15  Sim.  .".■::  Bee  1  Beav.  605  ;   i  De  <i.  St. 

-      2  Dowl.  N.  8.  565;  2  Exch.  Til;  and  Bee  Rogers  v.  Halloway,  5  M.  & 
Robinson  v.  Uurbidge.  :-  0.  B.  2H9. 


RELATIONS    OF    SOCIETIES,    ETC.,    TO    BANKERS.      267 

tor,  to  prevent  the  debtor  from  receiving  dividends  of  the  stock  accruing 
within  the  six  months. (z) 

Where  a  question  of  equitable  lien  on  the  stock  is  depending,  and  the 
bank,  in  consequence,  refuses  to  permit  a  transfer  of  it;  the  bank  is 
regarded  as  a  stakeholder,  and  the  Court  of  Chancery  refuses  to  make  an 
order  to  compel  the  *bank  to  permit  the  making  the  transfer; (a)  r^.oa7-. 
on  the  other  hand,  the  Courts  of  Equity,  on  a  proper  applica-  L  °  "J 
tion,  will  restrain  the  bank  from  transferring  stock,  without  notice  to  the 
party  interested. (&) 

A  purchaser  of  a  life  interest  in  stock,  sold  before  a  master  in  chancery, 
was  held  to  be  entitled  to  a  dividend  becoming  due  on  the  day  next  after 
the  sale.(c) 

Where  the  bank  is  necessarily  made  a  party  to  a  suit  for  the  transfer 
of  stock  into  the  name  of  an  executor,  to  whom  it  had  been  bequeathed 
in  trust,  and  the  bank  is  made  party  for  the  security  of  the  legacy,  its 
costs  are  paid  out  of  the  legacy. (d\ 

All  trustees,(<>)  or  other  persons,  having  any  annuities  or  stocks  stand- 
ing in  their  name  in  the  books  of  the  Bank  of  England,  or  any  government 
or  parliamentary  securities  standing  in  their  names,  or  in  the  names  of 
any  deceased  person  of  whom  they  shall  be  personal  representatives,  upon 
any  trust  whatsoever,  or  the  major  part  of  them,  U.  e.  the  major  part  of 
the  trustees  or  other  persons,)  shall  be  at  liberty  to  transfer  or  deposit 
such  stocks,  or  securities,  into  or  in  the  name  of  the  Accountant-General 
of  the  High  Court  of  Chancery,  with  his  privity,  in  the  matter  of  the  par- 
ticular trust,  (describiug  the  same  by  the  names  of  the  parties,  as  accu- 
rately as  may  be,  for  the  purpose  of  distinguishing  it,)  in  trust,  to  attend 
the  orders  of  the  said  court.  And  in  every  such  case,  the  certificate  of 
the  proper  officer  of  the  transfer,  or  deposit  of  such  stocks,  or  securities, 
shall  be  a  sufficient  discharge  to  such  trustees,  or  other  persons,  for  the 
*stocks,  or  securities,  so  transferred,  or  deposited. (e)  And  the  „„„81 
Court  of  Chancery  will  make  order  on  petition — not  motion^/)  L  J 
— in  respect  of  such  stock  and  securities,  or  dividends,  &c,  &c.  The 
order  to  have  the  same  effect  as  if  it  had  been  made  in  a  suit  regularly 
instituted.  (#) 

If  trustees  join  in  a  receipt,  prima  facie,  all  are  considered,  at  law,  to 

(z)  Watts  v.  Jefferyes,  3  Mac.  &  G.  372  ;  Bristcd  v.  Wilkins,  3  Hare,  235.  It  is 
only  a  common  law  judge  who  can  make  this  order.  Hulkes  y.  Day,  10  Sim.  41. 
As  to  stop  order,  S.  C,  and  see  13  Sim.  259.  As  to  form  of  judge's  order,  Robin- 
son v.  Burbidge,  1  L.  M.  &  P.  94;  see  Graham  v.  Connell,  id.  438;  Morris  v.  Ma- 
nesty,  7  Q.  B.  674 ;  and  see  Robinson  v.  Wood,  5  Beav.  388. 

(a)  Birch  v.  Corbyn,  1  Bro.  Ch.  C.  571.  As  to  transfer  of  stock  into  court, 
Headl.  Dan.  Pract.  Ch.  1650  ;  from  one  account  to  another,  id.  1658  ;  transfer  of 
stock  out  of  court,  id.  1659. 

(b)  Ex  parte  Field,  1  Y.  &  Col.  Ch.  1 ;  5  Vict.  c.  5,  s.  4 ;  see  40  Geo.  III.  c.  36 ; 
Headl.  Dan.  Pract.  155,  157,  1552;  Perkins  v.  Bradley,  1  Hare,  232,  as  to  costs; 
In  re  Marq.  of  Hertford,  1  Hare,  584,  form  of  affidavit;  and  see  1  Phill.  129. 

(c)  Anson  v.  Towgood,  1  Jac.  &  W.  637. 

(d)  Hammond  v.  Neame,  1  Swanst.  35  ;  see  Headl.  Dan.  Pract.  1551. 

(e)  10  &  11  Vict.  c.  96,  s.  1 ;  and  see  12  &  13  Vict.  c.  74,  amending  this  act. 
(/)  Harrison  v.  Masselin,  21  L.  J.  Chanc.  53. 

(ff)  10  &  11  Vict.  c.  96,  s.  2;  see  General  Orders,  Beav.  Orders,  369. 


G  B  A  N  I    OS    Til  B     I.  A  W     OF    i:  A  X  K  I  X  G . 

haw  received  the  money, (/i)  but  executors  are  not  bound  to  join   in  I 
:t ;  it'  they  '1",  whether  they  are  liable  or  not,  will  depend  on  their 
aoting.lt) 

The  Lord  Chancellor  is  now  empoweredYA;)  to  make  an  order,  in  writing 
vesting  in  any  person  or  persons  the  right  to  transfer  the  Btock  standing 
in  the  name  of  a  lunatic  trustee,  or  mortgagee,  or  the  right  to  receive  the 
dividends,  as  the  case  may  be  :  and  when  the  stuck  stands  in  the  name 
of  the  lunatic,  jointly  with  other  persons,  the  order  may  vest  such  right, 
either  in  the  other  persons,  who  are  jointly  interested  with  the  lunatic 
or  in  them  jointly  with  other  persons. (/r)  So,  where  stock  is  standing 
in  the  name  of  a  deceased  person,  trustee,  whose  personal  representative 
is  a  lunatic,  a  similar  order  may  be  madc(/)  Bo,  in  the  case  if  the  person 
in  whose  name,  jointly  with  others,  the  stock  stands  upon  any  trust,  is 
out  of  the  jurisdiction  of  the  Court  of  Chancery,)  m)  or  cannot  be  found,(n) 
or  concerning  whom  it  is  uncertain  whether  he  is  living  or  dead,  an  order 
may  be  made  to  vest  the  right,  etc.,  either  in  such  of  the  original  trus- 
tees as  are  within  the  jurisdiction,  &c,  or  to  vest  it  in  them,  together 
with  other  persons. (o) 

r*3rcn  *Infa>nt> — So,  when  an  infant  shall  be  entitled  to  any  stock, 
L  -I  upon  any  trust,  or  shall  be  entitled,  jointly  with  other  persons, 
upon  any  trust,  an  order  may  be  made  to  vest  the  right,  &c,  in  any  per- 
son or  persons,  in  the  first  case, — in  either,  the  persons  interested  jointly 
with  the  infant,  or  in  those  persons,  together  with  others,  in  the  second 
case.(p)  Also,  when  any  person  shall  neglect  or  refuse  to  transfer  stock, 
or  receive  dividends,  for  twenty-eight  days  after  date,  of  an  order  in 
Chancery,  an  order  may  be  made,  vesting  the  right,  &c,  in  any  person, 
&e.(q)  And  the  Bank  of  England  is  bound  to  comply  with  all  such 
orders,  vesting  the  right  to  stock,  to  transfer  stock,  or  to  receive  divi- 
dends, and  with  powers  of  attorney,  executed  by  such  appointees,  under 
such  orders,  (r) 

Ft  mt  < 'ovt  rt. — If  stock  stand  in  the  name  of  a  married  woman,  in  the 
books  of  the  bank,  it  seems  that  there  may  be  circumstances,  in  which 
she  might  maintain  an  action  for  the  dividends,  subject  to  a  plea  in  abate- 
ment for  the  non-joinder  of  the  husband  ;(s)  that  is  to  say,  unless  the 
bank  pleads  in  abatement,  she  may  recover. 

Stock  in  the  public  funds,  standing  in  the  names  of  two  persons 
jointly,  on  the  death  of  the  one.  becomes  at  law,  the  absolute  property  of 

[h)  Brice  v.  Stokes,  1 1  Ves. 

..II.  1  Sch.  &  L.  341.  (k)   13  &  M  Vict.  c.  CO,  s.  5. 

(I)   L3  A  11  Vict.  <•.  60,  .-'.  6.  (m)  Sec  5  Sim.  498;  3  C.  B.  967. 

See  12  Sim.  161. 
(o)    13  <k  M  Vict.  C.  60,  s.  22.     As  to  it  of  jurisdiction.  V.x  parte  Brad- 

Bhaw,  22  L.  .J..  Ch.  180. 

(p)   15  k  16  Vict.  C.  55,  b.  '■'■■     Since  this  act,  the  court  may  make  the  order,  in 
of  an  infant  sole  trustee,  though  oul  of  the  jurisdiction.     Cramer  v.  Cramer, 
5  De  <:.  .v  S.  312. 

L5  A  16  Vict.  c.  55,  s.  4.     So  in  case  of  personal  representative  of  deceased 
person  refusing,  s.  5 ;  see  5  De  G.  &  S.  33s  284. 

(r)  15  &  1*;  Vict.  c.  53,  s.  G.  remedying  the  difficulty  in  Re  Smyth's  Settlement, 
•i  DeG. 

(«)  See  Dalton  v.  Midland  Counties  Railway  Company,  13  C.  B.  474. 


RELATIONS    OF    SOCIETIES,    ETC.,    TO    BANKERS.      269 

the  survivor,  and  therefore  the  administrator  of  the  deceased  cannot 
maintain  against  the  survivor  an  action  at  law,  to  recover  the  deceased's 
share,  although,  if  there  be  a  trust  in  favour  of  a  third  person,  the  sur- 
vivor may  be  responsible  in  a  court  of  equity  to  dispose  of  the  property 
according  to  the  trust. (<) 

*It  would  seem,  that  in  all  cases,  other  than  those  provided  for  r^o7n-, 
as  above  by  the  various  statutes  cited,  of  a  number  of  persons  L  J 
paying  in  money,  in  their  joint  names,  to  the  Bank  of  England,  in  case 
one  or  more  of  them  should  abscond,  there  would  be  a  necessity  for  an 
application  to  a  Court  of  Chancery,  to  enable  the  remaining  members  of 
the  original  number,  or  body,  to  get  out  the  money,  unless  they  could 
satisfy  the  bank  that  the  others  were  dead.(«) 

Contracts  for  Sale  of  Stock. — A  contract  for  the  sale  of  stock,  differs 
from  a  contract  for  the  sale  of  a  specific  chattel ;  inasmuch  as  stock  does 
not  belong  to  the  head  of  chattels,  as  before  observed  ;(:e)  and,  therefore, 
a  contract  for  the  sale  of  stock  would  be  satisfied,  by  the  delivery  of  any 
stock  of  the  description  bargained  for;  consequently,  what  is  usually 
called  a  contract  for  sale  in  such  case,  does  not  mean  an  actual  sale,  but 
only  a  contract  to  deliver,  and  suet  contract  is  not  a  contract  for  the 
sale  of  "  goods,  wares,  or  merchandise,"  within  the  17th  section  of  the 
Statute  of  Frauds,  so  as  to  require  a  memorandum  in  writing.^) 

It  may  be  well  for  bankers,  and  other  traders,  to  remember,  that  no 
bankrupt  is  entitled  to  a  certificate  of  conformity,  who  shall,  within  one 
year  next  preceding  the  issuing  of  the  fiat,  or  the  filing  of  the  petition 
of  adjudication,  have  lost  2007.  by  any  contract  for  the  purchase  or  sale 
of  any  government  or  other  stock,  where  such  contract  was  not  to  be  per- 
formed within  one  week  after  the  contract;  and  railway  stock  is  within 
the  enactment. (z\ 

Generally,  with  respect  to  shares,  it  must  be  remembered,  in  cases 
where  a  power  of  attorney  "  to  sell,  assign,  and  transfer,"  is  held  by  an 
agent,  that  does  not  give  him  the  *right  or  power  to  pledge  for  r^o-i-i 
his  own  purposes,  as  to  secure  his  own  debt;  the  same  is  true  of  L  J 
a  power  of  attorney,  in  like  terms,  as  to  stock  in  the  funds ;  those  deal- 
ing with  the  party  who  acts  ex  mandate,  must  look  to  the  mandate,  to 
see  whether  he  is  acting  within  its  scope.  («) 

There  is,  however,  no  such  analogy,  (as  regards  specific  performance,) 
between  a  contract  for  the  sale  or  purchase  of  a  sum  in  the  three  per 
cent,  consols,  or  any  other  government  stock,  which  is  always  in  the 
market,  and  to  be  had  by  any  person  who  applies,  and  where  the  vendor's 
contract  is  fulfilled  and  satisfied  by  the  tender  of  any  three  per  cent, 
stock,  and  a  contract  for  the  sale  or  purchase  of  specific  shares,  which 

(t)  Crossfield  v.  Such,  8  Exch.  825 ;  S.  C,  22  L.  J.,  Exch.  325. 

(u)  Ex  parte  Collins,  2  Cox,  Ch.  C.  427.  (*)  Sup.  p.  353. 

\y)  Hesel-tine  v.  Siggers,  1  Exch.  856:  see  plea  of  gaming,  &c,  Knight  v.  Fetch, 
15  C.  B.  566. 

(z)  Ex  parte  Mattheson,  1  De  G.  M.  &  G.  459 ;  Ex  parte  Copeland,  2  De  G.  M.  & 
G.  914. 

(a)  De  Bouchont  v.  Goldsmid,  5  Ves.  211 ;  Wilson  v.  Moore,  1  My.  &  K.  351 ; 
see  7  Moo.  P.  C.  76.  Stamp  on  letter  of  attorney  to  sell,  transfer,  or  receive 
dividends  of  stock  and  exemptions.    Sweet's  Supplement,  Bythew.  Convey.  249. 


270         GRANT  ON  THE  LAW  OF  BANKING. 

arc  numbered}  and  of  course  cannot  be  had  to  a  larger  extent  than  the 
limited  Dumber,  and  may  not,  therefore,  be  in  the  market   at  all,  as 
garde  specific  performance  of  the  respective  contracts  ;    fur  there  may  be 
a  specific  performance  of  the  latter,  and  equity  will  enforce  it;  there 
cannot  be  of  the  former. (M 

If  a  bankrupt,  for  the  purpose  of  defrauding  his  creditors,  purchase 
stock,  of  which  he  obtains  the  transfer  into  a  fictitious  name;  the  courts 
of  equity  will  afford  relief  to  //"  creditors,  by  ordering  the  Bank  of  Eng- 
land ti>  erase  the  fictitious  name  and  insert  that  of  the  bankrupt  as  the 
transferee  -(c\  but  it  seems  doubtful  whether  anything  the  courts  can  do 
will  save  the  bank  from  the  risk  of  applications  hv  persons  whose  real 
names  may  be  identical  with  the  feigned  name,  which  appears  on  the 
books  as,  at  one  time,  owner  of  the  stock  ;(</)  the  alternative  is,  for  the 
_.,-.  bank  *never  to  admit  the  name  of  the  transferee,  without  being 
L  '  ~J  satisfied  that  there  is  a  real  person  corresponding  with  the  de- 
scription of  the  alleged  transferee.  Possibly  it  was  some  consideration 
of  this  kind,  which  led  to  the  difference  above  mentioned,  as  made  by 
statute  between  the  transferor  and  transferee;  the  one  having  a  right  to 
transfer  by  power  of  attorney;  the  other  not  being  empowered  to  accept 
by  attorney. 

Charity  Trusts. — The  Bank  of  England,  according  to  a  case  of  great 
importance,  which  was  much  discussed  and  finally  decided  in  the  Court 
of  Exchequer  Chamber,  in  Ireland,  and  which,  so  far  as  it  is  of  au- 
thority at  all,  bears  directly  on  the  subject  now  before  us,  is  bound,  in 
cases  where  stock  in  the  public  funds  stands  in  the  name  of  an  incorpo- 
rated body — ex.  gra.  a  body  of  trustees  of  a  charity — to  be  acquainted 
with  the  corporation,  so  as  to  have  a  genuine  authority  for  the  disposal 
of  the  property,  by  transferring  it  into  another  name.  It  is  not  Buffi- 
cient  to  examine  the  seal  with  which  the  power  of  attorney  to  transfer  is 
sealed,  to  see  if  it  is  the  common  seal  of  the  body,  for  that  may  have 
been  affixed  without  authority  of  the  corporation,  in  which  case  the 
power  of  attorney  is  not  their  deed,  and  does  not  bind  them;  but  the  at- 
testations to  the  affixing  of  the  common  seal  must  also  be  examined,  in 
order  that  the  bank  may  be  satisfied  that  the  authority  is  valid,  accord- 
ing to  the  Btatutes ;  unless  the  bank  know  or  find,  upon  inquiry,  that  such 
attestations  are  made  in  the  handwriting  of  two  credible  witnesses,  tiny 
will  not  perforin  their  duty  if  tiny  permit  the  transfer  to  be  made,  al- 
though they  may  be  satisfied  that  the  sealing  has  been  effected  by  the 
u-e  of  the  common  seal  of  the  body.  They  are  bound  to  as  minute  ami 
Careful    an    inquiry  before   they  transfer,  or    permit    the   transfer  of  the 

money,  as  if  the  money  were  their  own  •,   anything  less  than  this  makes 
.._.     them  liable,  for  tiny  are  parliamentary  ^bailees  of  the  stock, 
L        -I  wit 1 1  the  obligation  imposed  upon  them  for  profit  of  keeping  the 
books,  which  constitute  the  muniments  of  the  owner's  title. (V) 

(h)  Dnncufl  v.  Albrecht,  12  Sim.  I99j  Bee  5  Mure.  242, 
(<■)  Green  v.  Bank  of  England,  3  Y.  *v  Col.  Ex.  722. 

(<l)  See  Davis  v.  Bank  of  England,  :•  -J.  B.  Moo.  7  17 ;  and  see  3  Y.  &  Col.  Exch. 
724.     Inspection  of  books  of  Bank  of  England,  l  Meriv.  toy;  Scion's  Decrees,  13, 

(«)  ::  lr   L.  R.    X.  S.)  354,  365,  372  ;  see  Young  v.  Grote,  4  Bing.  253  ;  Marsh  \ . 
ting,  2  CI.  k  V.  264. 


RELATIONS    OF    SOCIETIES,    ETC.,    TO    BANKERS.     271 

Corporations. — Not  only  is  the  Bank  of  England  liable,  as  has  been 
said,  if  it  transfers  government  stock  in  virtue  of  a  forged  power  of  at- 
torney, in  ordinary  cases  of  individuals,  but  if  the  common  seal  of  a  cor- 
porate body  holding  stock,  be  improperly  affixed  to  a  letter  of  attorney, 
without  the  knowledge  or  consent  of  the  corporation,  even  though  affixed 
by  their  agent,  provided  they  have  not  subsequently  ratified  his  act,  and, 
in  consequence,  and  upon  the  production  of  the  forged  instrument,  the 
bank  make  the  transfer,  they  are  liable  in  an  action,  at  the  suit  of  the 
corporation,  for  not  transferring  the  stock,  and  for  permitting  it  to  be 
transferred  without  the  authority  of  the  plaintiffs. (/)     The  agent  in  the 
case  referred  to  had  signed  the  power  of  attorney,  and  his  signature  was 
well  known  at  the  bank  to  be  that  of  the  agent  of  the  corporation  ;  but  the 
attestations  affixed  were  forgeries.     In  fact,  it  is  the  duty  of  the  bank  to 
prevent  the  entry  of  a  transfer  in  their  books,  until  they  are  satisfied 
that  the  person  who  claims  to  be  allowed  to  make  it,  is  duly  authorized 
so  to  do.     Were  the  law  otherwise,  the  whole  property  of  every  stock- 
holder would  be  at  the  mercy  of  the  bank  clerks.     If  it  could  be  shown 
that  the  corporation  neglected  to  take  proper  measures  for  the  safe  and 
close  custody  of  its  common  seal,  so  as  to  be  chargeable  with  having  it- 
self contributed  to  the  loss,  then,  perhaps,  according  to  the  rule,  that,  of 
two  innocent  parties,  he  shall  bear  the  loss  whose  conduct  has  *led  r*o~,-| 
to  the  result,  the  corporation,  as  between  them  and  the  bank,  L  °     J 
must  suffer,  (ff)     If,  however,  the  corporate  body  were  trustees  only  of 
the  stock,  they  might  be  answerable  over  in  equity  to  the  cestuis  que 
trustent.     It  is  to  be  observed,  also,  that  there  would  be  this  objection 
to  the  plaintiffs  being  defeated,  even  on  the  above  supposition,  namely, 
that  the  attestations  are  a  statutory  part  of  the  power  of  attorney,  and 
that  the  plaintiffs  could  not  be  said  to  have  authorized  the  agent  to  forge 
the  attestations.  (#) 

Unclaimed  Dividends.—  By  the  56  Geo.  III.  c.  60,  all  stock  in  the 
public  funds,  upon  which  dividends  have  remained  unclaimed  for  ten 
years,  is  authorized  to  be  transferred  to  the  account  of  the  commissioners 
for  the  reduction  of  the  national  debt,  in  the  books  of  the  Bank  of  Eng- 
land j  the  statute  also  authorizes  the  Bank  of  England  to  re-transfer  such 
stock  to  any  person  who  shall  show,  to  the  satisfaction  of  the  governor 
of  the  Bank  of  England,  his  right  or  title  thereto,  but  if  the  governor 
shall  not  be  satisfied  of  the  legality  of  such  claim,  the  courts  of  chancery 
or  exchequer  may,  upon  petition  of  such  claimant,  &c.,  make  order  for 
the  retransfer,  &c. 

Under  this  statute  it  is  not  necessary  for  the  claimant  to  show  himself 
to  be  beneficially  interested  in  the  stock ;  to  prove  a  legal  claim  to  it  is 
sufficient,  (/i)     But  then  it  is  not  a  matter  of  course,  where  there  is  any- 

(f)  Bank  of  Ireland  v.  Evans's  Trustees,  3  Ir.  L.  R.  (N.  S.)  280.  Forgery  of 
such  attestations,  felony,  11  Geo.  IV.  and  1  Will.  IV.  c.  66,  s.  8.  It  will  be  cogent 
to  show  the  non-assent  of  the  corporation  to  the  act  of  their  agent,  if  they  lme 
prosecuted  him  to  conviction  for  the  forgery,  at  their  own  expense. 

(ff)  See  Ir.  L.  R.  (N.  S.)  314,  322,  323-336,  352. 

(a)  3  Ir.  L.  R.  (N.  S.)  374. 

(A)  In  re  Bigg,  1  Y.  &  Col.  Exch.  245  ;  see  Ex  parte  Holland,  8  Jur.  2d3  ;  1  Fhill. 

February,  1857.— 19 


272         GRANT  ON  THE  LAW  OF  BANKING. 

thing  to  indicate  the  parties  not  to  be  beneficially  entitled,  to  order  a  re- 
transfer  upon  the  claimants  making  out  a  legal  title,  such  a.s  a  transfer 
would  have  been  made  to  him  upon,  if  the  ten  years  had  not  elapsed  ; 
thus,  if  the  Btock  stands  in  the  came  of  two  persons,  of  whom  one  sur- 
vives the  other  upwards  of  ten  years,  but  has  not,  during  that  time, 

.    .  *elaimed  any  dividends,  the  court  refuses,  upon  petition  of  the  BUT- 

L  '  -I  vivor's  widow  and  personal  representative,  to  order  the  stock  to 
be  re-transferred  into  her  name,  or  into  the  names  of  the  two  deceased 
persons,  hut  directs  a  reference  to  inquire  who  is  entitled  to  the  stock, 
with  liberty  to  state  special  circumstances. (A 

It  is  the  legal  owner  of  the  stock — the  person,  or  his  representatives, 
in  whom  is  the  legal  title — that  is  to  have  the  re-transfer;  the  cestui  que 
trust  has  no  right  to  it.(Z-) 

Bank  Stock. — An  investment  by  trustees  of  trust  money  in  Bank  of 
England  Stock,  though  it  be  practically  as  safe  as  any  government  funds, 
is  not  regarded  by  the  courts  of  equity  as  a  proper  disposition  of  trust 
moneys,  and,  upon  knowledge  of  the  existence  of  the  fact  that  such  an 
investment  has  been  made,  they  will  order  the  stock  to  be  sold,  and  the 
.proceeds  invested  in  the  three  per  cents.  If,  therefore,  any  loss  should 
be  occasioned  to  the  trust  estate  by  the  fluctuation  of  the  bank  stock,  or 
of  the  government  stock,  between  the  dates  when  the  investment  was 
made  by  the  trustee,  and  the  re-investing  in  the  three  per  cents.,  the 
trustee  must  make  good  the  difference.^) 

But,  upon  a  loss  sustained  by  the  result  of  depreciation  in  the  three 
per  cents.,  the  trustee,  upon  a  proper  investment,  is  not  liable  for  the 
difference,  (m) 

An  extraordinary  division  of  a  sum  of  money  among  the  proprietors 
of  bank  stock,  beyond  the  usual  dividend,  byway  of  bonus,  is  considered 
as  an  accretion  to  the  capital  ;  therefore,  the  tenant  for  life  of  the  bank 
stock,  in  respect  of  which  the  division  is  made,  is  not  entitled  to  the 
sum  given  by  way  of  bonus,  but  only  to  the  dividends  upon  it  considered 
r*q-f>-|  *as  capital,  as  they  accrued  during  his  life  ;(//)  it  makes  no  dis- 
L  -I  tinction  that  the  division  was  in  money,  and  not  in  stock  ;  that 
did  not  cause  it  to  be  considered  as  a  profit  arising  and  payable  in  the 
time  of  the  tenant  for  life,  and  to  which,  therefore,  he  was  entitled,  in- 
asmuch as  all  the  profits,  ordinary  and  extraordinary,  arose  in  the  same 
way.(«) 

Tin  courts  of  equity  are  in  the  habit  of  making  orders  in  such  cases, 
to  lay  out  the  money  in  some  of  the  public  fund-,  and  to  pay  over  the 
dividends  to  the  tenant  for  life,  during  his  life. (/A 

Ch.  R.  379,  as  to  costs;  ami  E]  parte  Martin.  Jac.  55;  Hunt  v.  Peacock.  6  Bare, 
361. 

Ex  parte  Bam,  .':  My.  &  ('.  25 ;  Bee  in  case  of  bankruptcy,  &c,  Ex  parte  Gil- 
lett,  3  Mad.  28  ;  see  farther,  Ex  parte  Lavell,  2  Jac.  <v  \\ .  397. 
.  Mad.  33  ;  sec  B  A:  9  Vict.  c.  62. 

{/)  Hancom  v.  Allen.  2  Dick.  498  ;  Clough  v.  Bond,  3  My.  &  C.  40G ;  see  ! 
137,  150. 

(m)  Peat  v.  Crane,  2  Dick.  499,  n.:  see  J  My.  &  C.  496. 

(n)  Brander  v.  Brander,  4  Ves .802;  brine  v.  Houston,  (Dom.  Proc.  1 802,)  10 
Vcb.  189;  14  Ves.  70,  78;   13  Price,  77  1  ;   ParU  v.  Paris,  L0  Ves.  185;  Clayton  v. 


RELATIONS    OF    SOCIETIES,    ETC.,    TO    BANKERS.      273 

Nor  does  it  make  any  difference  that  the  "participation"  in  the  inter- 
est and  profits  be  mixed  by  the  bank  with  the  ordinary  3}  per  cent,  di- 
vidend, and  the  two  declared  as  a  single  dividend  of  8$  per  cent.(o)  But 
when  it  appeared  to  the  court,  in  the  case  of  tenants  for  life,  who  had 
been  in  possession  of  the  bank  stock  for  a  number  of  years,  that  the  di- 
vidends declared  by  the  bank  had  increased  from  2  J  per  cent,  to  3  per 
cent.,  and  from  3  per  cent,  to  3?  per  cent.,  and  then  5  per  cent,  was  de- 
clared as  "the  dividend  of  interest  and  profits  for  the  half-year,"  &c, 
and  the  tenants  for  life  had,  it  appeared,  taken  the  several  dividends, 
except  the  last,  without  question,  but  on  occasion  of  the  hist  dividend  it 
was  sought  by  the  remainderman  to  set  up  a  right  to  some  portion  of  this 
dividend,  (which  had  been  declared  differently  from  most  of  the  other 
cases  in  a  lump  sum,  without  mentioning  anything  about  bonus;) — Lord 
Eldon  intimated  that  he  had  no  means  of  ascertaining  ^whether  1-^577-1 
any,  or  what  part,  of  the  dividend  was  capital,  as  alleged,  and  L  '  J 
gave  the  whole  to  the  tenant  for  life.(p) 

Bequests. — Where  a  person  is  possessed  of  money  in  consols  and  other 
government  securities,  and  also  of  bank  stock,  and  devises  "all  his  for- 
tune then  standing  in  the  funds,"  the  bank  stock  does  not  pass.  The 
reason  is,  that  the  words  "the  funds"  have  received  an  interpretation  to 
mean  "the  public  funds,"  as  appears  from  the  Stamp  Acts,  which  have 
always  made  a  distinction  between  bank  stock  and  the  government 
funds.  (2) 

Stamps. — All  bills  of  exchange,  or  bank  post  bills,  issued  by  the 
Bank  of  England,  are  exempt  from  stamp,  as  are  all  their  promissory 
notes  for  the  payment  of  money. (r) 

Deposits  with  Bank  of  England. — The  Bank  of  England  is  largely 
engaged  as  a  bank  of  deposit ;  and  in  such  cases,  nearly,  if  not  altogether, 
the  same  rules  apply  to  its  regulation,  and  as  regards  its  relations  to  cus- 
tomers, as  have  been  stated  in  respect  of  banking  establishments  gener- 
ally ;  thus,  where  a  customer  is  in  the  practice  of  making  his  acceptances 
of  bills  of  exchange  payable  at  the  Bank  of  England,  and,  in  a  particu- 
lar instance,  such  an  acceptance  of  his  was  presented  at  a  quarter  after 
nine,  and  left  till  eleven  o'clock,  A.  M.,  and  then  refused  payment  for 
want  of  assets,  and  being  afterwards,  at  six,  P.  M.,  presented  again,  was 
again  refused  payment  by  a  person  stationed  by  the  bank,  although  the 
bank,  before  six  o'clock,  had  received  ^sufficient  assets  to  cover  r*37g-j 
the  bill ;  it  was  considered  that  the  bank  were  not  liable,  as  for  L 

Gresham,  10  Ves.  290;  Witt  v.  Steere,  13  Ves.  363.  Stamp  on  Transfer,  Sweet 
Supp.  Bythew.  Conv.  274.  Bequest  of  bank  stock,  Lindgren  v.  Lindgren,  9  Bea  \ . 
inf.  p.  377.  , 

(0)  Witt  v.  Steere,  13  Ves.  363,  365  ;  see  14  Ves.  79.  Semble,  the  shareholder 
in  such  case  has  an  action  at  law  to  recover  the  whole  dividend  declared ;  see  Da- 
vis v.  Bank  of  England,  2  Bing.  393  ;  10  A.  &  E.  449  ;  1  Mac.  &  G.  698.  Holder 
of  bank  stock  not  liable  as  such  in  bankruptcy ;  8  Geo.  I.  c.  8,  s.  43. 

O)  Barclay  v.  Wainwright,  14  Ves.  66  ;  Norris  v.  Harrison,  2  Madd.  2,9.  Hie 
question  was  not  between  tenant  for  life  and  remainderman,  and  the  bonus  was 
made  capital  by  statute.     See  Matthews  v.  Maude,  1  Russ.  &  M.  397. 

(q)  Grainger  v.  Slingsby,  21  L.  J.,  Chanc.  573. 

(r)  Sweet,  Supplem.  Byth.  Conv.  209,  266.  Receipts  of  Bank  of  England  and 
other  bankers,  when  exempt  from  stamp,  and  when  liable,  id.  268,  208. 


27-4        GKANT  OX  THE  LAW  OF  BANKING. 

negligence,  at  the  suit  of  the  acceptor,  because  the  second  presentment 
took  place  after  banking  hours;  hut  it  Beems  that  they  would  have  done 
well,  and  perhaps  it  is  their  duty,  to  inform  the  person  presenting  the 
bill  on  that  occasion,  that  they  had  thru  received  assets,  with  which  the 
bill  would  be  paid  next  day,  which,  in  fact,  was  dune. 

The  direction  given  to  the  jury  was  according  to  the  rule  already 
stated,  that  they  must  be  satisfied,  not  only  that  the  bank  had  assets  at 
eleven  o'clock,  when  the  payment  was  refused,  but  that  the  money  had 
been  paid  in  to  the  plaintiff's  account,  a  reasonable  time  before  eleven 
o'clock,  to  enable  them  to  know  that  such  was  the  case;  and  the  defend- 
ants were  found  not  guilty,  and  the  court  upheld  the  verdict. (s) 

Proving  in  Bankruptcy. — With  respect  to  bankruptcy  and  the  mode 
of  proceeding  which  the  bank  is  to  adopt,  in  relation  to  the  bankruptcy 
of  its  customers,  the  following  principal  points  have  been  determined. 

At  the  first  public  sitting  appointed  by  the  court,  assignees  of  the 
bankrupt's  estate  and  effects  shall  and  may  be  chosen  and  appointed ; 
and  all  creditors,  who  have  proved  debts  to  the  amount  of  ten  pounds 
and  upwards,  shall  be  entitled  to  vote  in  such  choice;  and  also  any  per- 
son authorized  by  letter  of  attorney,  from  any  such  creditor,  upon  proof 
of  the  execution  thereof,  either  by  affidavit,  or  by  oath  before  the  court, 
cicd  vocc.(t\ 

Now,  persons  having  interests  adverse  to  the  general  body  of  creditors, 
cannot  be  elected ;  therefore  a  banker  who  receives  money  under  the 
bankruptcy,  is  ineligible  for  assignee. (w) 

r*3-cn  *^  creditors  who  have  proved  debts,  &c,  may  vote.  Now, 
L  -I  all  bodies  politic,  and  public  companies,  incorporated,  or  author- 
ized to  sue,  or  bring  actions,  either  by  charter  or  act  of  parliament,  may 
prove  by  an  agent,  provided  such  agent  shall,  in  his  deposition,  swear 
that  he  is  such  agent,  and  that  he  is  authorized  to  make  such  proof.(x) 
But  it  seems  that  the  Bank  of  England,  prior  to  this  statute,  was  ad- 
mitted to  prove  by  their  clerk  without  power  of  attorney.  (#) 

Then  proof  having  been  made  on  behalf  of  the  bank,  it  may  vote  in 
the  choice  of  assignees,  by  a  person  authorized,  by  a  special  power  of  at- 
torney.^-) 

A.,  being  a  separate  trader,  is  also  a  partner  in  a  firm  of  B.,  C,  and 
A.  The  firm  indorse  a  bill  of  exchange  to  A.,  who  discounts  the  bill 
with  the  Bank  of  England,  (with  whom  he  keeps  an  account  in  his  own 
name,)  indorsing  it  to  them.  The  bank  was  aware  of  the  partnership  of 
];.,  <*.,  and  A.  ' 

On  the  bankruptcy,  it  was  contended  for  the  bank,  that  its  practice 
required  the  customer's  indorsement  of  the  bill,  for  the  purpose  of  addi- 
tional security  to  them,  and  that  therefore  they  were  entitled  to  prove, 
both  against  the  joint   estate  of  the  firm  and  the  separate  estate  of  A. 

(»)  Whitaker  v.  Bank  of  England,  1  Cro.  M.  &  R.  Til. 

(!)   11!  A:  l.'t  Vict.  c.  106,  s.  L39.  (u)  Ex  parte  Lacey,  G  Yes.  C25. 

)x)   12  &  13  Vict.  c.  106,  s.  1G4. 

(>/)  Ex  parte  Bank  of  England,  1  BwanBt  10;  1  Rose,  142,  overruling  18  Vcs. 
229  ;  see  2  Dm.  ft  War.  377. 

(z)  Ex  parte  Dank  of  England,  1  Swanst.  19. 


RELATIONS    OF    SOCIETIES,    ETC.,    TO    CANKERS.      275 

But  Lord  Eldon,  C,  was  of  opinion,  that  the  practice  of  the  bank  did 
not  vary  the  nature  of  the  bill,  for  it  substantially  was  a  joint  and  seve- 
ral security.  In  bankruptcy,  the  proof,  in  such  case,  was  confined  to  a 
right  of  election  between  the  joint  or  the  separate  estate.  In  all  cases 
in  which  the  holder  has  been  allowed  to  avail  himself  of  his  security  to 
the  full  extent,  there  has  been  either  an  ignorance  of  the  partnership,  or 
a  subdivision  of  them  into  distinct  trading  establishments.  Here  the 
distinct  trade  was,  in  fact,  no  more  than  his  separate  estate. (a) 

*  Discounts. — The  following  case  has  been  decided  on  the  sub-  r-*qon-i 
ject  of  discounts  : —  L         J 

The  payee  of  a  foreign  bill  of  exchange  annexes  a  condition  to  his  in- 
dorsement, before  acceptance,  thus,  "  Pay  the  within  sum  to  Messrs. 
Clerk  and  Ross,  or  order,  upon  my  name  appearing  in  the  Gazette  as  en- 
sign in  any  regiment  of  the  line,  between  the  1st  and  64th,  if  within 
two  months  from  this  date,  R.  Robertson." 

The  bill  was  drawn  upon,  and  accepted  by,  Kensington  &  Co.,  bankers, 
in  London,  but  not  till  after  it  was  indorsed  by  the  payee,  as  above,  and 
after  it  was  indorsed  by  Clerk  and  Ross.  Then  there  were  several  mesne 
indorsements,  until  it  came  by  indorsement  to  the  Bank  of  England, 
who  discounted  it.  When  the  bill  was  at  maturity,  including  the  days 
of  grace,  the  Bank  of  England  presented  it  to  Messrs.  Kensington,  by 
whom  it  was  paid. 

Robertson's  name  never  having  appeared  in  the  Gazette,  &c,  the  con- 
dition of  the  indorsement  was  not  performed ;  and,  upon  his  suing  the 
acceptors  for  the  amount  of  the  bill,  the  court  considered  him  to  be  en- 
titled to  recover;  because  the  bankers,  Kensington  &  Co.,  had  accepted 
after  the  condition  had  been  superadded  to  the  bill,  and  that  condition 
had  been  superadded  to  the  bill  at  the  outset,  and  before  it  got  into  cir- 
culation, and  the  condition  not  having  been  performed,  and  the  accept- 
ance having  been  made  with  knowledge  of  the  restriction,  the  property, 
in  such  case,  reverted  to  the  payee,  who  had  a  right  to  come  upon  the 
acceptors,  at  maturity,  just  as  if  he  had  not  indorsed  at  all. 

Hence  it  follows,  that  such  a  bill  cannot  be  safely  discounted,  without 
ascertaining  that  the  condition  on  which  the  payee  indorses  has  been 
satisfied.  (&) 

(a)  Ex  parte  Bank  of  England,  2  Rose,  82  ;  see  Ex  parte  Martin,  id.  87  ;  Ex  parte 
Bank  of  Scotland,  id.  197  ;  see  Flather's  Arch.  Bank.,  lltk  edit.  123.  By  12  &  13 
Vict.  c.  106,  s.  87,  notice  to  accredited  igent  of  a  public  company  is  to  be  deemed 
notice  to  the  company  in  cases  of  acts  of  bankruptcy.  What  amounts  to  notice 
by  letter,  Bird  v.  Bass,  6  M.  &  Gra.  143.  For  various  points  relative  to  Bank  of 
England,  see  Rules  and  Orders,  1  Fonbl.  Bank.  R.,  App. ;  Flather's  Bankr.,  11th 
ed.  354,  &c. 

(6)  Robertson  v.  Kensington,  4  Taunt.  30. 


27G         GRANT  ON  THE  LAW  OF  BANKING. 

[*381]  *C  II  AFTER   XIII. 

DISCOUNTS. 

MUCH  of  the  business  of  bankers  consisting  in  the  discounting  of  bills 
of  exchange,  it  is  necessary  to  state  some  points  of  the  law  as  affecting 
this  matter. 

The  rule  has  been  stated,  that  if  a  person  holding  a  bill  of  exchange 
deliver  it  to  a  banker  to  be  discounted,  or  if,  by  the  course  of  dealing 
between  the  customer  and  banker,  bills  received  by  the  latter,  on  account 
of  the  former,  are  considered  by  both  parties  as  cash,  minus  the  discount, 
so  that  the  customer  is  at  liberty  to  draw  on  the  banker,  as  against  those 
bill*,  be}'ond  the  amount  of  actual  cash  that  may  be  standing  to  his  ac- 
count in  the  books,  then,  in  the  event  of  the  bankruptcy  of  the  banker, 
the  assignees  of  the  bankrupt  are  entitled  t©  the  bills.  For  where  the 
banker  discounts  a  bill  for  a  customer,  giving  him  credit  for  the  amount 
of  the  bill,  and  debiting  him  with  the  discount,  there  is  a  complete  pur- 
chase of  the  bill  by  the  banker,  in  whom  the  whole  property  and  interest 
in  it  vests,  as  much  as  in  any  chattels  he  possesses  ;(a)  so  much  so,  that, 
on  his  bankruptcy,  the  property  and  interest  passes  to  the  assignees. 

Therefore,  discounting  in  this  way  makes  the  banker  the  purchaser  of 
tfu  bill. 

If,  however,  a  person  discounts  bills  with  bankers,  and  receives,  in 
part  of  the  discount,  other  bills,  not  indorsed  by  the  bankers,  and  these 
latter  bills  turn  out  to  be  bad,  the  bankers  are  not  liable;  for,  having 
taken  them  without  indorsement,  the  holder  takes  the  risk  on  himself, 
inasmuch  as  the  bankers,  by  refusing  to  indorse  them,  have  refused  to 
r*3^9H  *pledge  their  credit  to  their  validity,  and  the  transferee  must  be 
l  °  "*J  taken  to  have  received  them  on  their  own  credit  only.(o) 

On  the  other  hand,  a  banker  discounting  a  bill,  whether  for  a  custo- 
mer or  a  stranger,  there  being  no  indorsement  by  the  customer  or  stran- 
ger, and  the  bill  not  being  given  in  payment  of  an  antecedent  debt,  is  a 
mere  purchaser,  and  on  the  bankruptcy  of  the  acceptor,  has  no  recourse 
against  the  party  from  whom  he  took  it.(c) 

Presumption  in  favour  of  Bankers. — Such  a  degree  of  credit  is  given 
to  bankers  by  the  courts,  that  prima  facie  they  will  be  taken  to  have 
discounted  with  good  faith.  Thus,  where  a  clerk  was  sent  by  his  mas- 
ter, a  customer  of  a  bank,  to  ask  for  discount  for  a  bill,  but  with  orders 
to  tell  them,  when  he  asked  for  it,  the  particulars  of  an  arrangement  be- 

(fi)  Carstairs  v.  Bates,  3  Campb.  301;  Paley,  Princ.  and  Agent,  72. 
lb)  Fydell  w.  Clark,  1  Esp.  447. 

(cj  Governor,  &c,  of  Bank  of  England  \.  Newman,  1  Ld.  Raym.  442;  S.  C,  12 
341.     Where  the  bill  discounted  is  also  Endorsed,  as  in  Warwick  v.  Rogers, 

-      \I        i,    f '..„       OR!       OSLO       It     ;        Ktknrnui     Hull       V       P       ')  7  1    .    mr.    Ol     T         T        /~»      T>       AnA  T_ 


DISCOUNTS.  277 

tween  the  holder  and  the  master,  the  Court  of  Exchequer  would  not  pre- 
sume that  the  clerk  told  the  bankers  (who  discounted  the  bill)  these  cir- 
cumstances, but,  on  the  contrary,  presumed  that  they  bona  fine  dis- 
counted the  bill,  without  notice  of  those  circumstances,  in  the  absence 
of  proof  to  the  contrary.  ((?) 

Negligence. — Where  bills  are  discounted  before  acceptance,  many 
circumstances  may  throw  the  loss,  if  they  are  refused  acceptance,  upon 
the  bankers. 

Thus,  where  A.,  living  at  Wooler,  in  which  place  the  bankers  (carry- 
ing on  business  at  Berwick,)  had  also  a  branch  bank,  dealt  with  traders, 
residing  at  Wakefield,  and  had  been  used,  on  selling  goods  to  them,  to 
draw  bills  *on  them,  which  he  got  discounted  at  the  Wooler  r#qoo-i 
branch,  from  whence  they  were  transmitted  to  the  bankers,  at  *-  J 
Berwick,  who  sent  them  to  Wakefield,  to  the  traders,  for  acceptance ; 
and  they  had  been  warned  by  the  traders,  in  writing,  to  inquire,  on  dis- 
counting any  bills  that  A.  might  draw  upon  them,  whether  he  had  de- 
livered the  goods,  he  valued  for,  and  sent  the  carrier's  receipts  to  them, 
assuring  the  bankers  that,  in  that  case,  the  bill  would  be  accepted ;  and 
afterwards  the  bankers  discounted  a  bill,  and  sent  it  for  acceptance  to  the 
traders,  who,  after  retaining  it  for  ten  days,  saying  they  could  not  ac- 
cept it,  stating  the  invoice  of  the  goods  had  not  been  sent,  and,  after 
detaining  it  sixteen  days  more,  returned  it  unaccepted,  the  bankers  hav- 
ing made  no  objection  to  their  detaining  it  :  and  then  A.  stops  payment, 
without  delivering  the  goods,  or  sending  the  carrier's  receipt  to  the 
traders ;  the  bankers  were  held  to  have  no  claim  upon  the  traders,  the 
the  drawers  of  the  bill,  who  had  never  accepted  it. 

The  bankers  were  unaware  of  the  insolvent  condition  of  A.,  at  the 
time  they  discounted  the  bill  for  him. 

The  precise  question  was,  whether  the  circumstances  amounted  to  a 
constructive  acceptance — a  question  which  could  not  arise  at  the  present 
day,  because  since  1  &  2  Geo.  IV.  c.  78,  s.  2,  no  acceptance  of  an  inland 
bill,  and,  since  19  &  20  Vict  c.  97,  ss.  6,  7,  no  acceptance  of  any 
bill,  can  be  good,  except  made  in  writing,  on  the  bill — but  the  case  is 
detailed  here  as  an  instance  of  the  effects  of  negligence  in  discount- 
ing.^) 

Palmer,  having  borrowed  money  from  his  bankers,  in  Calcutta,  de- 
posited East  India  Company's  paper  with  the  bank,  to  a  greater  amount 
than  the  debt,  as  a  collateral  security,  and  authorized  the  bank,  in  de- 
fault of  repayment  *of  the  loan,  by  a  given  day,  to  sell  the  paper  r*384-i 
for  reimbursement  of  the  bank,  rendering  him  any  surplus.  Be-  L 
fore  default  in  repayment  of  the  loan,  he  became  insolvent :  at  the  time 
of  the  insolvency  the  bank  were  also  holders  of  two  promissory  notes  of 
Palmer  &  Co.,  which  they  had  discounted  for  them  before  the  transac- 
ts) Middleton  v.  Barned,  18  L.  J.,  Exch.  433. 

(e)  Mason  v.  Barff,  2  B.  &  A.  26.  A  promise  to  accept  a  bill  not  vet  drawn 
though  the  promise  be  in  writing,  and  though  bill  has  been  discounted  on  Faith 
of  itfnot  an  acceptance  ;  Bank  of  Ireland  v.  Archer,  11  M.  &  W.  383.  As  to  ex- 
isting bill,  see  Wynne  v.  Raikes,  5  East,  514;  see  Ex  parte  Hobhouse,  2  Deac. 
291. 


278         GRANT  ON  THE  LAW  OF  BANKING. 

tion  of  the  loan  and  the  agreement  as  to  the  deposit  of  the  Company's 
paper.  The  time  for  the  repayment  of  the  loan  having  expired,  the 
hank  sold  the  company's  paper,  the  proceeds  of  which,  after  satisfying 
the  principal  and  interest  due  on  the  loan,  produced  a  considerable  sur- 
plus. 

In  an  action  by  the  assignees  of  Palmer  &  Co.,  against  the  bank,  to 
recover  the  surplus,  it  was  held,  that  the  bank  could  not  set  off  the 
amount  of  the  two  promissory  notes;  and  that  the  clause  of  mutual  credit 
iu  the  Bankrupt  Act  did  not  apply.  For  though  the  bank  gave  credit 
to  I 'aimer  for  the  notes  they  had  discounted  for  him,  there  was  no  cor- 
responding  credit  given  by  him  to  them;  it  was  uncertain  whether  there 
would  be  any  money  coming  to  him  or  not;  the  credit  was  all  on  one 
Bide.(/) 

Bankers  discount  for  A.,  a  customer,  bills  of  exchange  to  a  large 
amount,  placing  the  amount  thereof  to  the  credit,  and  the  amount  of  the 
discount  to  the  debit,  of  themselves.  A.  becomes  bankrupt,  having,  at 
the  time,  a  balance  at  the  bank  in  his  favour,  of  170/.  19s.  lid.  The 
bills  were  indorsed  by  the  bankers  in  blank,  and  some  of  them  were  paid 
by  the  acceptors,  be/ore  the  bankruptcy;  the  others,  far  exceediug  in 
amount  the  above  sum,  did  not  become  due  till  some  time  after  the 
bankruptcy.  Before  they  became  due  the  assignees  commenced  an  ac- 
tion for  money  lent,  &c,  to  recover  the  above  balance,  and  subsequently, 
but  still  before  the  bills  became  due,  the  bankers  proved  against  the 
bankrupt's  estate  for  the  whole  amount  of  the  bills,  deducting  the  bal- 
ance of  179/.  19s.  lid. 

I~*38n  *There  was  held,  in  this  case,  not  to  be  any  purchase  of  the 
L  -I  bills,  but  only  the  ordinary  discounting,  or  loan  of  money  upon 
them. (y)  The  bankers  might  have  sued  the  bankrupt  (before  his  bank- 
ruptcy) for  money  lent  on  them;  they  might  have  proved  against  him, 
(after  his  bankruptcy,) had  the  bills  been  dishonoured  :  and  as  a  bill  may 
be  proved  againsl  an  indorsee,  just  as  against  the  drawer,  previously  to 
its  being  dishonoured  by  the  acceptor,  so  the  bankers  were  entitled,  by 
the  terms  of  0  Geo.  IV.  c.  10,  s.  50,(A)  to  set  off  these  bills  in  the  ac- 
tion brought  against  them  by  the  assignees,  this  being  a  case  of  mutual 
credit. (A 

It  is  material  to  distinguish  this  case  from  the  last.  In  that  there  was 
no  mutual  credit;  the  company's  paper  was  deposited  for  a  particular 
purpose,  and  no  credit  was  given  for  the  surplus.  Also,  the  duty  of  the 
assignees  there  was  to  redeem  the  paper  immediately,  and  if  they  had 
done  so,  no  debt  whatever  would  have  been  due  in  respect  of  the  loan, 
lb  re  was  :i  mutual  credit,  and  the  bankers  being  entitled  to  set  off,  the 
assignees  could  not  prevent  them  having  the  benefit  of  it,  by  bringing 
the  action  ton  soon.(/) 

(/)  Young  v.  Bank  of  Bengal,  1  Moo.  P.  C.  150;  see  per  Parke,  B.,  12  M.  &.  W. 

3ee  discount  distinguished  from  loan,  Gwatkin  v.  Campbell,  1  Jur.  (V.  S.) 
131,  Cbanc. 

S<  i  no*   l'-'  &  13  Viet.  c.  ]<>r>,  B.  171. 

Usager  v.  Currie,  12  M.  A  W.  751,  ::.:.  :>•.     N.  B.— It  was  there  denied 

••  'li-<  ounter  of  a  bill  is  a  purchaser  of  it. 


DISCOUNTS.  279 

A  partnership  arrange  with  their  bankers,  so  that  the  latter  were  to 
discount  indorsed  bills  of  exchange,  to  the  extent  necessary  to  meet  such 
acceptances,  &c.,of  the  partnership,  as  were  in  course  of  immediate  pay- 
ment at  the  banking  house.  In  order  to  meet  certain  acceptances  of  the 
partnership  coming  due,  they  remitted  to  the  bankers  an  indorsed  bill  ; 
these  acceptances  were,  however,  dishonoured  by  the  bankers,  who, 
shortly  after,  stopped  payment.  The  bankers  then  procured  the  bill  to 
be  accepted,  and  made  an  entry  in  their  books  of  their  having  discounted 
it;  but,  as  they  had  no  right  to  discount  the  bill,  without  *per-  p^oogn 
forming  the  trust  reposed  in  them,  the  title  to  the  bill  did  not  L  -1 
pass  to  their  assignees,  and  the  partnership  must  have  it  given  up  to 
them.(&) 

Bills  are  remitted  to  be  discounted,  the  proceeds  being  directed  to  be 
applied  iu  a  particular  way  :  the  remittee  did  not  get  the  bills  discounted, 
but  received  the  money  on  them  when  due.  Before  that  time,  the  re- 
mitters had  stopped  payment,  having  first  desired  to  have  the  bills  re- 
turned to  them  :  they  became  bankrupt  before  the  bills  were  paid  to  the 
remittee.  The  latter  was  held  to  be  liable  to  the  assignees,  to  refund 
the  whole  of  the  money  ;(l)  and  so  bills  remitted  for  sale,  the  proceeds 
to  be  applied  to  a  particular  purpose,  remain  the  property  of  the  remitters, 
until  the  purpose  is  satisfied. (ra) 

So,  where  a  customer  pays  a  sum  of  money  to  a  bank,  for  the  purpose 
of  providing  for  particular  bills,  he  being  at  the  time  indebted,  on  ad- 
vances, to  the  bank  to  a  larger  amount,  and  they,  instead  of  following 
his  instructions,  place  the  money  to  the  credit  of  his  account,  and,  con- 
sequently, the  bills  were  refused  acceptance,  and  whilst  they  remained 
unpaid  in  the  hands  of  the  holders,  the  customer  became  bankrupt,  his 
assignees  recovered  the  whole  of  the  sum  from  the  bank.(n) 

A  banker,  discounting  a  bill,  should  pay  in  cash,  or  give  credit  for  the 
amount,  debiting,  or  deducting,  for  the  discount ;  if  he  gives  a  bill,  in 
exchange,  he  ought  to  calculate,  and  allow  a  rebate  of  interest  for  the 
time  the  latter  has  to  run  ;  for,  if  any  circumstances  of  overreaching,  or 
imposition,  in  this  respect,  on  the  customer,  should  appear,  the  transac- 
tion would,  under  the  old  law,  have  been  usurious ;  and,  in  *eer-  |-*ogy-. 
tain  circumstances,  such  a  transaction  might  still  be  considered  L  J 
objectionable,  as  unfair  and  fraudulent. 

In  an  action,  (on  a  former  statute  against  usury,)  it  appeared  that  the 
defendants  were  bankers  at  Portsmouth,  and  A.,  a  lady  residing  there, 
drew  a  bill  for  600?.,  on  her  agent  in  London,  payable  to  defendants,  or 
order,  thirty  days  after  date,  which  the  bankers  discounted,  by  giving 
her  their  promissory  note  for  600/.,  payable  in  London,  at  three  days 
after  sight.     For  this,  the  bankers  received  a  discount  of  5?.  per  cent., 

(Jc)  Ex  parte  Frere,  Mont.  &  M'A.  263. 

(/)  Buchanan  v.  Findlay,  9  B.  &  C.  738;  see  as  to  set-off,  Thorpe  v.  Thorpe,  3 
B.  &  Ad.  580 ;  and  see  8  A.  &  E.  772. 

(m)  Muttyloll  Seal  v.  Dent,  8  Moo.  P.  C.  319.  ,...,, 

(n)  Hill  v.  Smith,  12  M.  &  W.  618 ;  the  bankers  would  also  be  liable  to  an  ac- 
tion for  non-performance  of  the  orders,  per  Alderson,  B.,  id.  627  ;  per  cur.,  id.  630 ; 
see  also  Alder  v.  Keighley,  15  M.  &  W.  117. 


280         GRANT  ON  THE  LAW  OF  BANKING. 

calculated  on  the  thirty  days  the  bill  had  to  run,  but  making  no  deduc- 
tion on  account  of  the  three  days'  grace  which  they  took  thereon.  The 
money  to  be  received  for  the  bill  was  to  be  remitted  to  London,  but  the 
bankers  gave  their  note  at  three  days,  without  asking  any  questions  as 
to  the  mode  in  which  the  customer  would  be  paid. 

Lord  Kenyon,  C.  J.,  was  clearly  of  opinion,  that  this  was  an  usurious 
contract,  whether  the  person  discounting  the  1*111  chose  to  receive  a  note 
or  cash.  If  she  chose  to  have  a  aote  payable  in  London,  the  bankers 
ought  not  to  have  taken  interesl  for  the  time  the  note  had  to  run,  but 
should  have  computed  it  from  the  time  the  note  was  payable. (d\  But 
where  a  banker  in  the  country  discounted  bills  at  four  months,  for  a  cus- 
tomer, and  took  the  whole  interest  for  the  time  they  had  to  run,  and  the 
customer,  on  being  asked  how  he  would  have  the  money,  directed  part 
to  be  carried  to  his  account,  and  part  to  be  paid  in  cash,  and  the  residue 
by  bills  in  London,  some  at  three,  others  at  seven,  and  others  at  thirty 
days'  sight;  that  was  decided  not  to  be  an  usurious  transaction,  as  the 
customer  had  exercised  a  free  option  how  he  would  receive  the  amount, (p) 
notwithstanding  the  bankers  had  made  no  rebate  of  interest  on  the  bills, 
P^qoQ-i  which  had  *a  long  time  to  run,  remittances  to  London  being 
L         -I  usually  made  by  bills,  at  thirty  days. 

These  decisions  are,  in  truth,  now  but  of  minor  importance,  and  are 
only  preserved,  as  showing  how  anxious  the  courts  have  been  to  enforce 
the  observance  of  fairness  and  scrupulous  integrity,  which  is  due  from 
a  banker  to  a  customer;  and,  notwithstanding  the  abolition  of  the  usury 
laws  by  17  &  18  A'ict.  c.  90,  the  courts  would  probably  be  inclined  to 
act  in  the  spirit  of  these  decisions,  for  the  protection  of  the  customers  of 
bankers. 

A  branch  of  the  National  Provincial  Bank  of  England,  discounts  for  a 
customer  a  bill  drawn  by  him,  and  accepted  by  A.  13.  This  bill,  which 
was  for  olio/.,  was  dated  17th  January,  and  was  at  three  months,  and 
would  consequently  become  due  20th  April.  On  the  19th,  the  customer 
brought  another  bill  to  the  bank,  for  the  same  sum  as  the  former,  dated 
18th  April,  for  the  purpose  of  retiring  the  former.  The  manager  of  the 
bank  consented  to  retire  the  former  bill,  but  the  course  pursued  was  not 
strictly  a  retiring  of  the  bill;  for  the  course  taken  was,  to  send  up  to 
London  the  fresh  bill,  giving  directions  to  their  London  agents  to  order 
payment  of  the  original  bill,  which  had  been  previously  sent  up  to  them 
by  the  manager.  A.  15.  was  credited  in  his  account  with  the  amount  of 
the  bill,  365?.,  less  the  discount. 

After  some  time,  and  various  further  transactions  between  A.  II.  and 
the  bank,  had  taken  place,  the  bill  of  the  L8tfa  April  proved  to  be 
forged,  and  was  dishonoured. 

I  'nder  these  circumstances  it  was  contended,  in  an  action  by  the  bank, 
on  the  first  bill,  against  the  acceptor,  that  what  had  been  done  by  the 
bank  in  regard  to  the  first  bill  was  equivalent  to  a  payment  of  it,  as  they 

(o)  Matthew?,  q.  t.  v.  Griffiths,  Peake,  N.  P.  Rep.  200.  In  this  case  a  second 
discount  was  in  foci  paid. 

(p)  Sammetl  v.  Tea,  1  B.  &  P.  144,  152.  In  this  cum-  no  charge  was  made  for 
commission,  Btamps,  postages,  &c.;  see  15  Ves.  121  ;  17  id.  332. 


DISCOUNTS.  281 

had  given  the  drawer  credit  for  the  sum  for  which  it  was  drawn,  less  the 
discount  ;{q\  but  to  this  the  court  did  not  assent. 

Where  a  customer  places,  in  the  hands  of  his  bankers,  two  *bills  r:(:„R„-. 
for  1,000/.,  indorsed  by  him,  for  the  amount  of  which  it  was  L  J 
agreed  he  should  draw,  the  bankers  having  previously  refused  to  dis- 
count them;  and  the  customer  only  draws  for  65/.,  and  the  bankers  em- 
ploy a  broker  to  discount  the  bills,  and  become  bankrupt  shortly  after 
the  bills  were  deposited,  the  customer  is  entitled  to  the  proceeds  of  the 
bills.(r) 

Re-discounting. — A  customer  draws  a  bill,  which  is  accepted,  payable 
at  his  bankers' ;  he  discounts  it  with  the  bank,  indorsing  it  to  them ; 
they  re-discount  and  indorse  to  a  third  party. 

On  the  maturity  of  the  bill  it  is  presented,  by  the  holder,  at  the  bank, 
along  with  other  bills,  payable  there,  all  indorsed  by  the  bank  ;  all  these 
were  paid  without  any  indication  whether  the  bank  paid  as  indorsers,  or 
agents  for  the  acceptors  ;  the  account  of  the  acceptor  of  this  bill  is  over- 
drawn at  this  time,  and  he  stops  payment  the  same  day. 

Next  day  notice  of  dishonour  was  given,  by  the  bank,  to  the  custo- 
mer, and  he  was  debited  with  the  amount  of  it. 

It  was  left  to  the  jury  to  say,  whether  the  bank  paid  as  indorsers  on 
their  own  account,  or  as  agents  of  the  acceptor.  The  jury  found  that 
they  paid  in  the  former  character,  which  is  tantamount  to  finding  the 
bill  was  dishonoured,  and  they  had  a  verdict,  and  the  court  held  the 
bankers  to  have  had  a  right  to  pay  as  indorsers,  reserving  to  themselves 
time  to  inquire  whether  they  would  honour  the  bill,  or  not,  and  that 
there  was  no  obligation  on  them  to  inform  the  holder  in  what  capacity 
they  paid.(s) 

Accommodation  Bills. — Where  bankers  discount  for  a  customer,  the 
drawer,  a  bill  accepted  for  his  accommodation,  which  is  dishonoured, 
and,  after  that  event,  have  notice  that  it  was  an  accommodation  bill,  and 
are  requested  by  the  customer  not  to  apply  to  the  acceptor,  to  which  they 
assent,  and  *afterwards  the  customer's  account  with  them  shows  r*39Q-| 
a  balance,  in  his  favour,  to  a  larger  amount  than  the  bill,  the  L 
bankers  are  bound  to  discharge  the  bill  out  of  the  balance,  and  cannot 
keep  it  as  a  security  for  the  fluctuating  balance,  which  might  ultimately 
become  due  to  them,  and,  therefore,  if  they  sue  the  acceptor,  they  will 
be  nonsuited. (?) 

It  made  no  difference,  that  after  the  balance  had  been  in  his  favour, 
as  above  stated,  the  customer  became  greatly  indebted  to  the  bank,  and 
failed  before  action. (t) 

Death  of  Drawee.—  Bankers,  having  discounted  for  a  customer,  who 
did  not  indorse,  a  bill  drawn  by  B.  on  A.,  another  customer,  and  accepted 
by  him,  payable  at  the  bankers'  house,  on  the  morning  of  the  day  in 
which  it  becomes  due,  wrote  it  off  in  his  account  to  his  debit,  having  at 

(q)  Bell  v.  Buckley,  25  L.  J.,  Exch.  163  ;  see  15  C.  B.  87. 
(r)  Ex  parte  Edwards,  2  M.  D.  &  D.  G.  625. 
(s)  Pollard  v.  Ogden,  2  E.  &  B.  459. 

(t)  Marsh  v.  Houlditch,  reported  Chit.  Bills,  289,  n.,  6th  edit.;  compare  Ilam- 
mersley  v.  Knowlys,  2  Esp.  665. 


282         GRANT  ON  THE  LAW  OF  BANKING. 

that  time  in  their  hands  1,421/.,  to  the  credit  of  A.  The  bill  was  for 
4G7/.  A.  was  at  this  time  dead,  but  this  was  unknown  to  the  bankers 
at  the  time  they  debited  A.,  &C, 

The  bankers  wore  held  to  be  entitled,  when  the  bill,  in  such  circum- 
stances, became  due,  to  reimburse  themselves  out  of  the  acceptor's  funds 
in  their  hands,  haying  no  notice  of  the  death. (u) 

Restrictivi  Indorsement. — At  one  time  it  was  held,  that  a  bill  of  ex- 
change might  be  arrested  ;it  any  period  of  its  course  of  currency,  or  ne- 
gotiability, by  what  was  called  a  restrictive  indorsement,  ex.  gra.  thus, 
— "  Pay  to  A.  and  no  one  else," — or,  "  The  within  must  be  credited  to 
]>.,  value  on  account,"  &c,  by  which  means,  it  was  considered,  the  ne- 
gotiability was  stopped,  so  that  A.  or  B.  had  neither  of  them  any  right 
to  indorse  the  bill  over;  if,  therefore,  a  bank  discounted  a  bill,  with 
such  an  indorsement  upon  it,  it  did  so  in  its  own  wrong,  and  the  negli- 
gence, involved  in  the  act,  prevented  the  bank  from  recovering  the  mo- 
r*RQ1H  ney  ^rom  *^ne  parties  to  the  bill.  Therefore,  in  a  case  where  a 
L  -I  bill  bore  an  indorsement  in  the  second  form  of  the  above  exam- 
ples, and  also  a  subsequent  indorsement,  purporting  to  be  by  B.  "to  C, 
or  order,"  and  the  bill  was  discounted  by  the  Bank  of  England,  in  the 
way  of  business,  and  then,  the  acceptor  having  absconded,  a  friend  of 
the  drawers'  paid  the  amount  of  the  bill,  for  the  honour  of  the  drawers, 
and  as  their  agent,  and  afterwards,  it  having  been  found,  that  the  last- 
mentioned  indorsement  was  a  forgery,  the  drawers  sued  the  bank  to  re- 
cover the  amount  of  the  bill,  which  had  been  paid  by  their  agent,  the 
bank  was  held  liable  to  refund  the  money  to  the  drawers,  because,  it  was 
said,  they  ought  to  have  taken  notice  that  the  negotiability  of  the  bill 
was  stopped,  or  destroyed,  b}-  the  indorsement  to  B.,  and  nut  having 
done  so,  must  stand  to  the  loss. (a;) 

A  restrictive  indorsement  is  now,  however,  fully  settled  to  have  no 
power  to  stop  the  negotiability  of  a  bill  of  exchange;  for  that  a  bill  of 
exchange,  originally  made  payable  to  a  person  named,  or  his  order,  is  in 
its  nature,  negotiable;  and  if  it  be  afterwards  indorsed  with  such  words 
as,  pay  to  A.  ami  him  only,  this  transfers  to  A.  the  whole  interest  in  the 
instrument,  and  that  interest  he  may  assign  as  he  pleases;  any  restric- 
tion or  confinement  of  his  power  to  assign  is  contrary  to  the  nature  of 
things,  and  therefore  void.  Therefore  there  is  nothing,  in  a  restrictive 
indorsement,  to  prevent  the  restricted  indorsee  from  making  any  assign- 
ment of  the  bill,  so  as  to  confer  a  title  to  the  bill.fa)  The  righl  of  action, 
r*3<vn  w^'r'1  tn<'  subsequent  indorsee  has.  i.-,  it  i-  true,  only  *for  the 
L  '''  ~J  benefit  of  the  restraining  indorser,  or  of  the  cestui  que  trust,  as 
the  case  may  be. 

('/)  Bogeraon  v.  Ladbroke,  1  Bing, 

{/)  Anchor  v.  Bank  of  England,  Dongl.  615  :  per  Ld\  Mansfield,  C.  J.,  Willes  and 
Ashhnrst,  J<.\  Bailer,  J.,  dissentiente.  Bee  practice  of  Bank  of  England  at  that 
time,  stand  j  Jiurr.  1220. 

(y)  Marrow  v.  Stuart.  B  Moo.  P.  0.  267  :  Carlon  v.  Ireland,  25  L.  J.,  Q.  B.  113. 
Tli<-  decision  in  the  first  of  these  cases  is  tin-  more  materia]  to  he  known,  as  it  ex. 
overruled  the  contrary  doctrine  laid  down  both  in  Bayley  on  Bills  and 
Bylea  on  Bills.  There  is  no  difference  in  this  respect  between  lulls  of  exchange, 
whether  foreign  or  inland,  and  promissory  notes.  2  Burr.  1224  ;  see  Gay  v.  Lan- 
der, >;  Dowl.  &  L.  78. 


DISCOUNTS.  283 

Hence  the  decision,  previously  mentioned,  would  be  departed  from  at 
the  present  day;  for  it  turned  upon  the  assumption,  that  there  might  be 
an  effectual  restrictive  indorsement,  stopping  the  negotiability  of  the  bill; 
from  which  it  was  held  to  follow,  that  the  bank  discounting  such  a  bill,  as 
in  that  case,  could  not  have  sued  the  acceptor,  or  other  parties  to  it,  and 
therefore  under  the  circumstances  of  the  case,  could  not  retain  the  money 
that  had  been  paid  in  mistake  on  behalf  of  the  plaintiff.  Now,  however, 
that  the  groundwork  of  the  conclusion  is  overturned,  the  conclusion 
would  be  different ;  that  is  to  say,  there  is  nothing  to  prevent  a  bank 
from  discounting  a  bill,  which  bears  a  restrictive  indorsement  to  A., 
with  a  subsequent  indorsement  by  A.  to  some  one  else,  or  order,  &c., 
and  from  being  able  to  recover  in  such  case,  as  well  as  in  any  other  case 
of  discount. 

If,  however,  a  person  uses  words  to  show  that  the  restrictive  indorse- 
ment was  made  to  the  restricted,  as  the  agent,  or  mere  servant  of  the 
indorser,  and  that  he  never  was  intended  to  take  an  interest  in  the 
bill;  thus,  a  bill  of  exchange  is  indorsed  by  the  payee  to  A.,  who  in- 
dorses to  B.  thus, — "  Pay  to  B.,  or  his  order,  for  my  use,"  and  B.  dis- 
counts the  bill  with  his  bankers,  who,  without  inquiry,  do  so,  and  apply 
the  proceeds  of  the  bill  to  the  use  of  B.  :  the  property  in  the  bill  is  held 
to  remain  in  A.,  who  may  sue  the  bankers. (2) 

This,  therefore,  seems  to  be  the  law  on  the  subject :  a  restrictive  in- 
dorsement cannot  be  made  to  have  the  effect  of  stopping,  or  destroying, 
the  negotiability  of  a  bill  of  exchange :  but  an  indorsement  may  be  made 
on  a  bill,  in  such  a  way,  as  to  show  the  indorser  not  to  have  intended 
that  his  indorsee  should  take  any  interest  of  his  own  in  the  bill,  or  its 
proceeds, — that  he  is  nothing  more  than  the  hand  to  *receive  |-;).„„C)^ 
the  proceeds — in  such  case,  if  the  latter  discounts  with  a  bank,  L  °  °J 
they  must  see  to  the  application  of  the  money  which  they  pay  to  the  re- 
stricted indorsee,  on  account  of  the  bill,  (it  is  said ;)  and  the  purpose  is 
to  prevent  a  failing  man  from  disposing  of  the  bill  before  it  becomes  due 
and  from  pledging  it  to  relieve  himself  from  his  own  debts,  at  the  ex- 
pense of  his  correspondent.  But  such  an  indorsement  does  not  prevent 
the  indorsee  from  receiving  the  money  from  the  acceptor,  when  the  bill 
becomes  due.  To  the  objection  that  it  cannot  be  expected  that  bankers, 
when  asked  to  discount  such  bills,  should  look  into  the  accounts  between 
the  principal  and  his  agent ;  it  is  admitted,  that  it  cannot  be  expected 
that  they  should,  but  still  if  they  take  a  bill  so  indorsed,  they  take  it  at 
their  peril,  and  must  be  bound  by  the  state  of  the  accounts  between  those 
parties. 

In  the  case  from  which  these  principles  are  taken,  the  court  would 
only  say,  that  such  an  indorsement  constituted  the  restricted  indorsee 
a  trustee  for  the  restraining  indorser;  they  expressly  avoided  the  ques- 
tion, whether,  if  he  indorsed  over,  all  the  subsequent  indorsees  would 
be  trustees  for  that  indorser ;  but  it  seems  they  did  consider  the  bank, 
who  advanced  money  on  the  bill  to  the  restricted  indorsee,  to  be  bound 

(z)  Sigourncy  v.  Lloyd,  8  B.  &  C.  622,  where  the  restricted  indorsee  had  in- 
dorsed over  to  the  bankers. 


284         GRANT  ON  THE  LAW  OF  BANKING. 

to  inquire  into  the  state  of  the  accounts  between  him  and  hi.-  indorser, 
so  as  to  Bee  whether  he  was  indorsing  for  the  benefit  of  himself,  or  his 
indorser.  In  this  case,  the  account  between  the  restraining  indorser  and 
his  indorsee  was  in  favour  of  the  former,  to  the  amount  of  mora  than 
3,0002.,  exclusive  of  the  bill,  which  was  for  more  than  3,1002.;  but,  on 
the  morning  of  the  .lav,  when  the  discount  was  made,  the  balance  <>( 
account  of  the  indorsee  with  his  bankers  Mas  upwards  of  3,700Z.,  in  his 
favour;  in  the  course  of  tin,'  day  the  balance  became  largely  against 
him.  The  bill  was  paid  at  maturity,  and  the  hankers  received  the  amount 
of  it. 

The  bankers  were  held  liable  to  the  restraining  indorser,  in  an  action 
r*°0-n  for  the  money  had  and  received,  on  account  of  *the bill.(a)  Jt 
L  J  is  to  be  observed,  that  the  bankers,  in  this  case,  were,  in  a 
manner,  parties  to  the  application  of  tin'  money  contrary  to  the  indorser's 
intention,  for  being  the  bankers  of  the  restricted  indorsee,  they  them- 
selves applied  the  proceeds  to  his  account  with  them. 

Perhaps,  it  may  be  doubted,  whether  the  decision  would  have  been 
the  same,  had  the  party,  for  wdioin  the  bank  discounted  the  bill,  been  a 
stranger  to  them. 

Agent. — An  agent  applied  to  a  banking  company  on  several  occasions, 
to  discount  bills  drawn  by  his  principal,  and,  at  the  commencement  of 
the  transactions  with  them,  informed  them  who  the  drawer  and  acceptors 
were  of  a  bill,  which  he  applied  for  discount  of,  and  they  agreed  to  dis- 
count it,  without  recpuiring  the  agent's  indorsement.  Several  subse- 
quent discounts  took  place  under  the  same  circumstances;  but,  upon 
some  of  the  bills  offered,  they  required  and  obtained,  the  agent's  indorse- 
ment. The  acceptances  turned  out  to  have  been  forged  by  the  principal, 
of  which  fait  the  agent  was  wholly  unaware. 

The  agent  becomes  bankrupt,  and  it  is  held,  there  being  nothing  to 
show  that  the  agent  had  not  handed  over  the  proceeds  of  the  bills  to  t In- 
principal,  or  that  those  proceeds  could  be  recalled,  that  the  banking 
house  could  not  prove  upon  the  bills,  which  the  agent  had  not  indorsed  ;(b) 
for  although  an  agent  may  pledge  his  credit,  so  as  to  be  liable  upon  a 
r*9Qr-|  bill?  though  he  do  not  indorse, (c)  yet  the  mere  fact,  *of  an  agent, 
L  °L  J  procuring  a  bill  to  be  discounted  for  his  principal,  creates  no 
liability  on  the  agent's  part.(<£) 

Manager  of  Bank. — A  manager  of  a  banking  company  has  permis- 
sion to  carry  on  his  separate  trade  ;  as  a  trader,  he  deals  with  the  hank, 
on  the  terms  QflUal  between  hanker  and  customer,  and  being  possessed  of 
certain  hills,  in   his  character  of  trader,  drawn  and  accepted  by  firms  of 

(a)  Sigourney  v.  Lloyd,  8  B.  k  0.  022.  Mr.  Justice  Story,  (Bills,  pp.  234,  235,) 
Bays  expressly,  "Every  subsequent  bolder  must  receive  the  monej  subject  to  the 
original  designated  appropriation  ;  and  if  be  roluntarilj  a  sente  to  or  aids  in  any 
oilier  appropriation,  it  will  in-  a  wrongful  conversion  thereof,  for  which  he  will  be 
beld  responsible."  The  objection  t<>  what  the  hanker.-  did  in  Sigourney  \.  Lloyd, 
appears  to  he  that  they  bad  paid  A.'.<  debt  to  them  w  iih  B.  -  money.  The  decision 
wa-  affirmed  in  Bzch.  Ch,  B.  <'..  5  Bing.  525;  ::  Y.  a.  Jerv.  220. 

Ei  part<  Bird,  i  De  G.  .v  8.  I'T-;:  Bee  Guraey  v.  Woniersley,  4  E.  &  B.  133. 
aet  \  ■  Ryde,  .">  Taunt.  488. 

Stead  v.  Thornton,  :;  B.  &  a<1.  :;;.:,  n. 


DISCOUNTS.  285 

good  reputed  credit,  he  deposits  them,  without  indorsing  them,  and  ob- 
tains  an  advance  upon  them,  his  account,  at  the  time,  being  already 
slightly  overdrawn  ;  therefore,  this  transaction  was  a  loan,  not  a  discount, 
and  upon  the  subsequent  bankruptcy  of  the  drawers  and  acceptors,  the 
manager  was  held  bound  to  make  good  the  loss  to  the  bank.(e) 

Banker's  Commission. — With  regard  to  commission,  it  seems  obvious, 
and  has  been  expressly  laid  down,  that  a  banker  is  as  well  entitled  to  his 
commission,  for  his  trouble  in  transacting  money  negotiations,  as  a  factor, 
for  his  trouble  in  effecting  sales;  commission  is  a  lawful  charge,  provided 
it  is  reasonable  and  usual, (/)  this  last  fact  being  a  question  for  the 
jury.fr/)  Commission  may  also  be  charged  for  the  trouble  of  obtaining 
acceptance,  and  payment  of  bills. (/t) 

In  all  cases,  where  bankers  make  any  charge  by  way  of  commission, 
for  extra  trouble  or  expense  to  which  they  may  be  put,  in  transacting 
business  for  a  cusromer,  it  was  considered,  during  the  old  laws  against 
usury,  to  be  advisable  to  separate  the  charges,  for  the  trouble  of  keeping 
the  accounts,  from  the  charges  of  interest,  &c,  in  the  first  instance,  be- 
cause it  was  said  it  will  not  be  allowed  to  a  *party,  who  has  know-  r^onp-i 
ingly  received  anything  as  interest,  afterwards  to  apply  it  to  L  J 
another  account,  as  he  finds  convenient.^') 

If  a  banker  undertake  to  conduct  any  transaction,  not  in  his  ordinary 
mode  of  business,  and  stipulate  for  a  certain  charge  to  be  made  by  him, 
in  consideration  of  such  extra  trouble  and  expense  independently  of  "all 
casts,  charges,  damages,  and  expenses  that  he  may  be  put  to  by  means  of 
the  premises,"  this  was  not  considered  as  usurious ;  for,  commission  for 
trouble  is  not  necessarily  to  be  intended  as  a  colourable  reservation  of 
further  interest,  beyond  the  legal  interest,  but  as  a  compensation  for 
trouble  not  comprehended  within  the  words  "costs,  &c."(/.;) 

Thus,  A.,  being  indebted  to  his  bankers,  on  the  balance  of  his  account 
with  them,  and  having  an  agreement  with  a  third  party,  for  the  pur- 
chase of  growing  timber,  for  4,800?.,  part  to  be  paid  for  by  A.  at  the 
time  of  the  execution  of  the  agreement,  and  part  by  bankers'  acceptances, 
at  different  dates,  assigned  to  the  bankers  this  agreement,  and  all  his  in- 
terest therein,  they  undertaking  to  fulfil  the  agreement  with  respect  to 
making  the  several  payments,  &c,  as  therein  mentioned,  upon  the  trust, 
in  the  first  place,  out  of  the  proceeds  which  might,  &c,  arise,  from 
the  sale  of  the  timber,  to  retain  and  repay  themseves  the  said  pur- 
chase money,  then  the  amount  due  to  them  from  A.,  on  his  account, 
together  with  interest  at  bl.  per  cent.,  up  to  the  time  of  payment,  and 
also  the  further  sum  of  200?.,  as  and  for  a  reasonable  profit  and  compen- 

(«)  Gwatkin  v.  Campbell,  1  Jur.  (N.  S.)  131. 

(/)  Curtis  v.  Livesey,  cited  4  M.  &  Selw.  197 ;  Ex  parte  Gwin,  2  Deac.  &  C.  12 ; 
Baynes  v.  Fry,  15  Ves.  120  ;  Winch  v.  Feim,  2  T.  R.  52,  n. ;  sec  17  &  18  ^  ict.  c.90; 
17  Ves   332. 

(g)  Masterman  v.  Cowrie,  3  Campb.  488 ;  Carstairs  v.  Stein,  4  M.  &  Selw.  192; 
Hammett  v.  Yea,  1  B.  &  P.  144;  see  11  M.  &  W.  333. 

(h)  Baynes  v.  Fry,  15  Ves.  120. 

(«)  Per  Ld.  Kenyon,  C.  J.,  7  T.  R.  185. 

\k)  Palmer  v.  Baker,  1  M.  &  Selw.  57  ;  see  now  17  &  18  \ict.  c.  90,  abolishing 
the  whole  system  of  laws  against  usury. 


286         GRANT  ON  THE  LAW  OF  BANKING. 

sation  for  the  trouble  they  would  be  at  in  the  present  badness,  and  also 
all  costs,  &c,  (as  above.)  The  hankers  brought  an  action  of  trover 
against  the  sheriff,  to  recover  the  value  of  part  of  the  timber  seized  by 
him,  under  aji./a.,  issued  at  the  suit  of  a  creditor  of  A.,  and  they  had 
r*QQ"T  a  vertlict>  which  was  uphold,  *the  court  considering  2001.  Dot 
*-  -I  more  than  an  adequate  compensation  for  trouble,  and,  therefore, 
the  agreement  not  void  for  usury.  (/.•) 

//(/- n.<t. — Where  a  mortgagt  of  land  is  made  by  way  of  collateral 
security,  fur  such  balance  as  may  eventually  be  due  from  the  customer 
to  his  banker,  it  is  no  objection  to  charging  the  land  with  such  balance, 
that  it  has  been  partly  composed  of  interest,  turned  into  principal  by 
rests  and  interest  on  that  interest,  according  to  the  course  of  dealing 
between  a  banker  and  his  customers.  In  other  words,  the  balance  due 
is  to  be  ascertained  by  reference  to  the  course  of  dealing  between  the 
banker  and  customer,  and  having  ascertained  the  amount,  the  only 
burden  fastened  on  the  land  is  this  balance.  Also,  such  balance  was 
allowed  to  carry  interest  at  5^.  per  cent,  per  annum,  but  no  more ;(/)  but 
note  there  is  no  objection,  in  the  absence  of  fraud,  to  any  rate  of  interest, 
which  may  be  agreed  on,  for  the  stat.  17  &  18  Vict.  c.  90,  has  abolished 
the  old  system  of  the  usury  laws. 

And  in  a  case  which  occurred  long  previously  to  the  late  changes  in 
the  usury  laws,  a  custom  of  bankers  in  Liverpool,  to  strike  a  balance 
every  quarter,  and  send  the  account  to  the  merchant,  and  then  to  make 
that  balance  carry  interest  as  principal  for  the  next  quarter,  was  held  to 
be  good,  notwithstanding  it  was  objected  to  as  usurious./;//) 

In  the  latest  case  ou  the  subject,  the  facts  were  the  following: — A 
customer  gave  to  a  bank  a  mortgage  <>u  land,  for  securing  the  balance 
due  on  the  account.  The  bank  having  threatened  a  sale,  the  amount 
claimed  by  them  was  paid,  upon  an  arrangement  leaving  open  the  ques- 
r*3Q8l  t*on>  wnat  was  tne  exact  sum  due  to  them  on  the  balance  of  the 
L  '  -I  account.  *Differeuces  arising  as  to  this,  A.  obtains  a  decree  in 
equity,  for  an  account  as  between  banker  and  customer.  The  account 
included  charges  for  discounts,  some  at  5/.  per  cent.,  and  some  more;(«) 
also  commission  on  the  discount  of  bills,  commission  on  dishonoured  bills, 
and  commission  for  trouble  of  keeping  A.'s  accounts.  Upon  a  bill  by  A., 
to  redeem  the  mortgage,  it  was  held  to  be  incompetent  for  him  to  object 
cither  to  the  charges  for  interest  or  commission  as  usurious,  because  a 
mortgagor  impeaching  a  security  for  usury  can  only  be  relieved  on  pav- 
ing what  is  justly  due  ;  and  if  the  contract  between  him  and  the  banker 
was  to  pay  on  a  banker's  account,  as  it  seems  it  must  be  considered, 
then  the  meaning  of  that  is  an  account,  as  usually  kept  between  banker 
and  customer.  (';) 

(k)  See  note  (k),  preceding  page. 

(/;   ELufford  v.  Bishop,  B  I:  -ce  Thomas  v.  Cooper,  2  Eq.  R.  1102;  and 

Lord  Clancarty  v.  LatOUCbe,  1  ball.  &  15.  120,  as  to  the  mode  of  taking  bankers' 
account-. 

(m)  Caliot  v.  Walker,  2  An-tr.  495. 

(n)  .See  3  &  4  Will.  IV.  <•.  98,  and  2  &  3  Vict.  C.  37. 

(o)  Thomas  v.  Cooper,  .'(  Eq.  Rep.  417,  Lords  Justices:  see  James  v.  Rice,  1 
Kay,  231 ;  Byles  on  Bills,  Cth  edit.  24C. 


COUNTRY  BANKS.  AND  BANK  NOTES.        287 

^CHAPTER   XIV.  [*399] 

COUNTRY   BANKS,   AND   BANK   NOTES. 

Most  questions  respecting  country  banks,  and  their  bank  notes,  may 
be  usefully  considered  together.  It  has  been  endeavoured  to  bring  to- 
gether the  various  points  of  the  law  on  this  subject,  arranged  with  a 
view  to  purposes  of  practical  banking,  and  to  the  elucidation  of  questions 
of  actual  occurrence. 

A  person,  not  a  regular  customer,  paid  into  the  Totncs  Bank  on  March 
18,  a  quantity  of  notes  of  a  Dartmouth  bank,  purporting  to  amount  to 
8007.,  which  were  received  as  a  deposit  of  $001.,  to  bear  interest  from 
that  day,  at  3?.  per  cent,  per  annum,  to  be  withdrawn  only  after  twenty 
days'  notice,  the  interest  to  cease  from  the  day  of  notice. 

The  course  of  business  between  the  two  banks  was  as  follows  : — Any 
notes  of  the  Dartmouth  Bank,  received  in  the  course  of  the  day  at  the 
Totnes  Bank,  were  by  them  transmitted,  that  evening,  by  the  post,  to 
Dartmouth,  where  the  parcel  would  be  delivered  to  the  bankers  the  fol- 
lowing morning ;  the  Dartmouth  Bank,  in  like  manner,  sent  back  each 
day  the  notes  of  the  Totnes  Bank,  received  in  the  course  of  that  day, 
and  if,  on  the  evening  of  any  one  day,  a  balance  appeared  in  favour  of 
the  Totnes  Bank,  the  Dartmouth  Bank  paid  to  the  Loudon  correspond- 
ents of  the  Totnes  Bank  the  amount,  by  means  of  an  order  on  their  Lon- 
don correspondents,  sent  to  them  by  letter  the  same  evening ;  but  if  the 
balance  was  in  favour  of  the  Dartmouth  Bank,  and  the  Totnes  Bank  did 
not  receive  a  sufficient  quantity  of  notes,  in  the  course  of  the  next  day,  to 
meet  that  balance,  the  difference  was  ordered  to  be  paid,  *in  Lon-  pMAQ.-i 
don,  by  the  London  correspondents  of  the  Totnes  Bank,  &c,  by  L 
letter  sent  that  evening. 

On  the  morning  of  March  17,  the  accounts  between  the  two  banks 
exactly  balanced,  but  on  the  evening,  a  parcel  containing  some  of  the 
Totnes  Bank  notes,  and  a  cheque  upon  them,  making  together  340/., 
was  sent  from  the  Dartmouth  Bank.  The  parcel,  arriving  in  the  usual 
course  of  post,  was  not  opened  until  the  opening  of  the  bank  next  morn- 
ing, when  the  Totnes  Bank  became  debtor  to  the  Dartmouth  Bank,  to 
the  extent  of  340?. 

On  March  19,  early  in  the  morning,  and  before  the  usual  hour  of 
opening  the  bank,  the  parcel  containing  the  above-mentioned  Dartmouth 
Bank  notes  was  received  by  the  Dartmouth  house,  and  credit  given  for 
it,  to  the  Totnes  bankers,  in  the  account  with  them  j  also,  before  the 
opening  of  the  bank.  The  bank  stopped  payment  about  half-past  three 
on  the  same  day. 

In  an  action,  by  the  depositor,  against  the  Totnes  bankers,  it  was  de- 
cided that,  at  any  rate,  the  plaintiff  would  be  entitled  to  recover  to  the 
extent  of  340Z.  j  but,  besides  that,  by  the  course  of  dealing,  he  was  en- 
titled to  recover  the  whole,  because  the  Dartmouth  Bank,  having  given 

February,  1857.-20 


(iRAST    OX    THE    LAW    OP    DA  K  B  I X  G. 

credit  in  account  to  the  Totnes  Bank,  for  the  wliole,  must  he  taken  to 
have  paid  the  wliole. (o-) 

A  country  bank  consists  of  two  partners,  \.  and  B.,  one  of  whom,  B., 
commits  an  act  of  bankruptcy,  and  becomes  bankrupt,  at  a  time  when 
another  hank  in  the  country  holds  certain  hank  notes  of  theirs,  payable 
at  the  house  of  El.  &  <'<>.,  the  correspondents,  in  London,  of  the  country 
bank  first  referred  to.  Tbese  notes  were  presented  to  R.  &  Co.,  for  pay- 
ment, but  a  part  only  was  paid  by  1!.  &  Co.,  out  of  the  funds  of  A.  and 
B.,  then  in  their  hands,  A.  paying  the  residue,  by  indorsing  to  the 
country  bankers  a  bill,  given  by  a  debtor  to  the  firm  of  A.  and  B.,  for  a 
r*inn  ^ar?er  amount,  which  they  consented  to  take  in  payment,  and 
L  J  *when  due,  it  was  paid  to  the  latter  bank,  by  the  acceptors. 
Then  A.  commits  an  act  of  bankruptcy,  and  a  joint  commission  issues, 
and  the  assignees  claim  from  the  second  country  bank  the  proceeds  of 
the  bill,  and  also  the  sum  paid  on  the  bank  notes,  by  R.  &  Co.,  on  tin 
ground  that  the  partnership  having  been  dissolved  by  the  act  of  bank- 
ruptcy of  B.,  of  which  A.  had  notice,  he  was  not  competent  to  dispose  of 
the  partnership  property. 

The  court  held,  that  as  A.  had  done  no  more  than  satisfy  a  claim,  which 
was  complete  at  the  time  of  the  bankruptcy  of  B.,  as  he  was  warranted 
in  doing,  the  action  was  premature,  until  an  account  had  been  taken  in 
equity,  and  it  was  ascertained  whether  there  was  a  balance  against  B., 
or  not — that  it  was  impossible  to  contend  that  a  partnership,  when  one 
partner  commits  an  act  of  bankruptcy,  must  immediately  shut  up  the 
house — and  that  A.'s  having  acted  in  making  the  payment,  with  a  know- 
ledge of  the  act  of  bankruptcy  of  B.,  made  no  difference. 

At  the  bar,  and  by  the  court,  the  discussion,  as  far  as  appears,  was 
confined  to  the  case  of  the  payment  on  the  bill,  the  payment  on  the 
notes  being  probably  considered  too  clearly  good,  against  the  assignees, 
to  bear  argument,  or  require  remark. (b\ 

The  principle  of  this  case.(')  which  has  been  upheld  in  subsequent 
cases,  is  this  : — A  solvent  partner,  in  a  firm,  even  with  notice  of  an  act 
of  bankruptcy  committed  by  his  partner,  may  satisfy  a  partnership  credi- 
tor out  of  the  joint  funds  in  his  (the  solvent  partner's)  hands,  provided 
the  creditor's  claim  were  already  arrived  at  maturity  at  the  date  of  tin- 
act  ;  for,  in  such  circumstances,  the  solvent  partner  is  in  the  situation 
of  a  person  winding  up  the  partnership. 

Accordingly,  if  one  of  two  partners  become  bankrupt,  and  the  solvent 
,  partner,  considering  the  firm  to  be  in  a  condition  *to  pay  its 
J  debts,  continues  the  business,  and  pays  partnership  money  into 
i  banker's,  to  be  applied  in  discharge  of  running  bills  of  the  firm,  made 
payable  at  the  bank,  and  afterwards  the  solvent  partner  in  turn  become 
bankrupt,  and  his  assignees,  to-ctln  r  with  the  a.-signees  of  the  other 
partner,  bring  an  action  against  tin  banker,  to  recover  the  money  so  paid, 
they  will  not  be  allowed  to  succeed.      In  other  words,  the  banker  may 

(a)  Gillard  v.  Wise,  5  B.  i  C.  13  L  >v  E.  36. 

i//)  Harvey  v  Crickett,  G  Man.  x  S.  335  ;  Bee  Collyer,  Partnersh.  582,  et  seq. 

(c)  Harvey  v.  Crickett,  5  M.  &  Selw.  336. 


COUNTRY    BANKS,    A  SB    BANK    NOTES.  2«9 

safely  receive  such  payments,  applying  the  money  in  the  mode  specified, 
and  is  not  liable  over  to  the  assignees,  for  the  amount. (rf) 

But  all  such  cases  must  be  free  from  ground  for  imputing  fraudulent 
preference;  iftherebereasonableeviden.ee  of  that  in  the  transaction,  the 
creditor  will  not  be  permitted  to  avail  himself  of  partnership  property, 
which  may  have  been  transferred  to  him  by  the  solvent  partner,  after 
the  bankruptcy  of  the  other  partner. 

Thus,  in  a  case  which  arose  out  of  the  bankruptcy  of  the  country  bank 
of  H.  &  Co.,  just  referred  to,  of  which,  as  has  been  stated,  Ramsbottom  & 
Co.,  were  the  town  correspondents.  H.  drew  a  bill  upon  Duck,  for  a  valid 
consideration,  which  was  duly  accepted.  The  bill  having  been  put  into  the 
hands  of  Ramsbottom  &  Co.,  afterwards  got  back  into  the  hands  of  11.  & 
Co.,  not  having  been  negotiated  by  Ramsbottom  &  Co.  H.  &  Co.  applied 
to  Ramsbottom  &  Co.  for  advances,  which  the  latter  agreed  to  make,  but 
upon  security.  H.  &  Co.  were  ready  to  give  securities,  amongst  which  was 
the  above  bill.  On  May  17th,  which  was  subsequent  to  the  request  of  ad- 
vances, but  before  the  deposit  of  the  bill  as  security,  H.  commits  an  act  of 
bankruptcy;  28rd  May,  the  bill  was  deposited  with  Ramsbottom  &  Co.,  as 
security  for  advances  they  had  made.  A  separate  commission  of  bank- 
ruptcy issued  against  H.  Ramsbottom  &  Co.  then  brought  an  action  as 
indorsees  of  the  bill,  against  Duck,  but  ineffectually,  the  principal  ground 
of  non-suit  *being,  the  knowledge  of  Ramsbottom  &  Co.  of  the  p^no-i 
bankruptcy  of  H.,  on  the  23rd  May.  •-         J 

The  court,  however,  did  not  go  so  far  as  to  say,  that  the  creditor's 
knowledge  of  the  bankruptcy  of  one  partner  is  conclusive,  to  establish 
a  fraudulent  preference,  in  contemplation  of  the  bankrupty,  of  the  other 
partner. 

The  decision  only  extends  to  laying  down,  that  the  facts  stated  state  go 
far  towards  establishing  a  fraudulent  preference. (e) 

Note  payable  Ten  Days  after  Sight.  A  partnership,  consisting  of 
three  persons,  A.,  B.  and  C,  carried  on  business  as  bankers,  and  received 
from  a  customer  250/.  as  a  deposit,  giving  him  in  acknowledgment,  a 
promissory  note  for  that  amount,  payable  ten  days  after  sight,  with 
interest  at  the  rate  of  three  per  cent,  per  annum,  "  to  the  day  of  accept- 
ance," and  signed  by  A.  only.  This  note  bore  date  13th  November, 
1813,  the  money  having  been  deposited  23rd  November,  1813.  In 
1819,  A.  retired  from  the  firm,  and  was  succeeded  by  D.,  who  carried  on 
the  business  with  B.  and  C  till  1823,  when  B.  died,  and  afterwards  C. 
died  insolvent.  14th  May,  1825,  the  customer  demanded  payment  of 
interest  due  on  the  note,  and  the  same  was  paid  up  to  November,  1824, 
by  desire  of  A. ;  but  D.  told  the  customer  at  that  time,  that  no  more 
than  two-and-a-half  per  cent,  could  be  paid  in  future,  and  he,  in  the 
customer's  presence,  altered  the  note,  by  changing  the  three  into  two- 
and-a-half.     In  January,  1827,  payment  of  the  principal  and  interest 

(d)  Woodbridge  v.  Swann,  5  B.  &  Ad.  633  ;  Ex  parte  Robinson,  1  Mont.  &  A\  rt 
18,  cor.  Ld.  Brougham,  C. 

(e)  Ramsbottom  v.  Duck,  reported  1  Montag.  Partnersh.  Appx.  of  notes,  pp. 
133-135.  The  power  thus  vested  in  the  solvent  partner  over  the  partnership  effects 
is  personal  to  him.     Fraser  v.  Kershaw,  25  L.  J.,  Chanc.  445. 


GRANT  ON  THE  LAW  uF  BANKING. 

at  three  per  cent.,  and  also  at  two-and-a-half  per  cent,  was  demands!  of 
A.,  and  the  following  points  were  decided  in  an  action  by  the  customer 
against  A.  : — 

1.  The  acceptanct  in  this  note  meant  tight,  and  that  therefore  the 
r*i(\±l  promiesoiy  Dote  need  not  be  left  with  the  maker  for  *acceptance, 
L  J  in  order  to  render  him  liable  upon  it,  if  it  had  not  been  altered, 
but  that  the  alteration  for  the  benefit  of  A.  made  it  wholly  invalid,  as  a 
security,  between  the  parties. 

2.  The  payment  of  interest  was  sufficient  evidence  to  show  a  principal 
sum  to  be  due. 

3.  The  promissory  note  was  admissible  in  evidence,  to  show  on  what 
terms  the  deposit  had  been  made,  although  it  was  objected  for  A.,  that 
the  note  having  been  altered  in  a  material  part,  with  consent  of  the 
holder,  ought  to  have  had  a  fresh  stamp,  to  render  it  admissible, (/)  and 
the  customer  recovered  upon  the  facts  proved  in  evidence,  and  the  count 
for  money  lent. 

Bank  Notes,  when  Money. — After  what  has  been  said,  it  is,  perhaps, 
hardly  necessary  to  state,  that  wherever  country  bank  notes  have  once 
been  treated,  by  the  parties  to  a  transaction,  as  money,  no  objection  can 
afterwards  be  taken  that  they  are  not  so^er  se. 

For  instance,  if  a  stakeholder  receives  country  bank  notes  as  so  much 
money,  and  afterwards  pays  them  over  wrongfully  to  the  original  staker, 
after  he  has  lost  the  wager,  he  cannot  object,  in  an  action  for  money  had 
and  received,  brought  by  the  winner,  to  recover  the  amount  won,  that 
the  notes  are  not  money  ;(</)  for,  as  they  had  been  received  as  money, 
and  treated  as  money  by  all  parties,  they  must  be  so  considered  by  the 
court,  (ft) 

So,  a  person  to  whom  a  sum  was  payable  under  an  agreement,  having 
once  received  it  in  bank  notes,  without  complaint  or  objection,  cannot 
afterwards  allege  this  not  to  be  a  payment  under  the  agreement. (/) 
r*-lfn  -v's">  sucn  action  may  be  maintained  for  notes,  by  the  *true 
L  -<  owner,  against  a  third  person,  into  whose  hands  they  have  come 
maid  fide,  provided  their  identity  can  be  traced  and  ascertained.  (A) 

Still,  it  has  been  said,  a  banker  stands  in  no  different  position  from 
other  persons,  as  to  his  own  notes;  if  he  sues  for  instance,  for  goods 
sold,  the  defendant  could  not  support  a  plea  of  tender,  by  Bhowing  that 
he  had  offered  the  amount  in  the  banker's  own  notes;  he  must  have 
recourse  to  his  set-off  in  respect  of  the  notes. (I) 

Bank  notes,  nnder  some  circumstances,  will  pass  by  a  devise  of  "all 
my  money,  &c,"  in  a  will.(m) 

There  is  a  distinction  between  Bank  of  England  notes  and  country 
hank  notes,  in  respect  of  bequests,  &c. 

(/)  Sutton  v.  Toomer,  7  B.  ft  C.  416. 

(g)  Pickard  v.  Bankes,  13  Bast,  20;  Bee  Timmie  v.  Gibbins,  21  L.  J.,  Q.  B.  403. 

(ft)  Vox  v.  Cudworth,  cited   L2  J.  J>.  M<">.  402  j  see  Lowndes  v.    Anderson,  13 

130. 
ft)  Shipton  v.  Casson,  8  I>.  .v.  I! v.  130. 

Clarke  r.  Shee,  Cowp.  191. ' 

Per  Parke,  B.,  Foster  v.  Wilson.  12  If.  A  W.  201. 

a.  271,  i:.',:  compare  Stuart  \.  ktarq.  of  Bute,  u  Vcs.  cci. 


COUNTRY    BANK?,    AND    BANK    NOTES.  201 

Bank  of  England  notes,  unlike  other  ckoses  in  action,  are  capable 
of  acquiring  a  locality;  and  were  considered  to  be  bo,  previously  to  their 
being  made  a  legal  tender,  <tc.  So  that  they  have  a] way.-  been  lit  U  to 
pass  in  a  will  by  a  bequest  of  all  the  testator  should  have  in  his  house 
at  his  death, (h)  or  equivalent  terms.     But  it  is  not  so  in  cj  -  untry 

bank  notes ;  any  such  notes  that  may  be  in  the  house  would  not  pass 
under  such  words. (o) 

Bank  of  England  notes  pass  as  "goods  and  chattels,"  in  a  will  :{p) 
in  general,  chores  in  action  do  not  pass  by  designation  of  ••  Ou  goods 
and  chattels."  in  a  particular  locality.^)  Country  bank  notes  do  not 
pass  under  such  designation. 

Formerly,  great  particularity  was  required  in  statements  in  the  memo- 
rials of  annuities  under  the  annuity  acts,  when  *the  cousidera-  nM/uri 
tion  had  passed  not  in  actual  cash,  but  in  cheques  on  bankers, (/•)  *-  J 
or  in  country  bank  notes  ;(s)  but  these  decisions  have  become  unim- 
portant, since  the  repeal  of  the  laws  prescribing  enrolments  of  annuities, 
which  was  effected  by  17  &  18  Vict.  c.  90. 

At  Common  Law,  a  tender  in  Bank  of  England  notes  of  a  debt  has 
been  held  to  be  a  good  tender,  if  the  creditor  does  not  object  to  receive 
notes  in  payment. (£) 

The  same  is  settled  of  provincial  bankers'  notes. (») 

Bank  of  England  notes,  (before  they  were  made  a  legal  tender,)  were 
held  to  pass  in  a  will  as  cash,  under  the  words  "  all  that  shall  be  in  my 
house  at  my  death. "(x\  Bank  notes,  whether  of  the  Bank  of  England, 
or  of  private  banks,  may  now  be  taken  in  execution  under  fieri  facias.{v\ 

Bank  of  England  notes  pass  by  delivery  as  cash  abroad,  although  by 
the  law  of  the  country  in  which  the  deliver}-  is  made,  no  property  in  the 
note,  would  be  transferred  by  merely  delivering  it;(^)  for  being  promis- 
sory notes,  payable  to  bearer,  they  are  by  force  of  the  stat.  3  &  4  Anne, 
c.  9,  transferable  by  delivery,  wherever  that  delivery  takes  place. (a) 

The  Bank  of  England  may  issue  bank  notes  unstamped  ;(l)  it  has  the 
exclusive  privilege  of  doing  so  within  the  city  of  London,  and  three  miles 
thereof,  (c) 

(«)  Popham  v.  Lady  Aylesbury.  Ambl.  G8  :  Brook  v.  Turner.  7  Sim.  671 :  see  11 
Ves.  662  ;  7  Bear.  4,  9. 

(o)  Brook  v.  Turner.  7  Sim.  671.  Cash,  in  a  trill,  is  a  stricter  term  than  mo- 
ney.    Beaies  v.  Crisford,  13  Sim.  592. 

(p)  Chapman  v.  Hart.  1  Ves.  sen.  271. 

(q)  Hertford  v.  Lowther,  7  Beav.  1. 

(r)  See  2  Bro.  &  B.  19  :  ST.  R.  328 ;  Abbott  v.  Douglas,  1  C.  B.  483. 

(s)  Morris  v.  Wall.  1  B.'  k  P.  20S;  see  Faircloth  v.  Guruey,  2  M.  &  Sehv.  822  ; 
Doe  d.  Church  v.  Pontifex,  19  L.  J.,  C.  B.  145. 

(t)  Grigby  v.  Oakes,  2  Bos.  &  P.  526 ;  Wright  v.  Reed.  3  T.  R.  554  ;  Anon.,  1 
Eq.  Cas.  Abr.  318,  319. 

(u)  Polglass  v.  Oliver.  2  Cro.  k  J.  15. 

(x)  Popham  v.  Lady  Aylesbury,  Ambl.  68.  See  as  to  country  bank  notes,  Brooke 
v.  Turner.  7  Sim.  671. 

(y)   1  &  2  Vict.  c.  110,  s.  12. 

(z)  De  la  Chaumette  v.  Bank  of  England,  9  B.  &  C.  208. 

(a)  De  la  Chaumette  v.  Bank  of  England.  2  B.  &  Ad.  385. 

(b)  7  &  8  Vict.  c.  32.  s.  7. 

(c)  9  Geo.  IV.  c.  23,  s.  1.  Judicial  notice  is  taken  that  the  Bank  of  England  is 
within  the  citv  of  London.     Partridge  v.  Bank  of  England,  9  Q.  B.  411. 


'•? 


292  GRANT    ON    THE    LAW    OF    BANKING. 

r*10~l  Banks  of  six,  or  fewer  than  six  persons,  provided  they  *werc 
J  in  existence  as  banks  of  issue  before  6th  May,  1844,  may  issue 
bills  and  notes,  and  promissory  notes,  payable  to  bearer  on  demand,  on 
unstamped  paper,  except  within  the  city  of  London,  and  three  miles 
thereof.(c) 

With  respect  to  the  form  of  bankers'  notes,  the  stat.  55  Geo.  III.  c. 
184,  b.  Is,  prohibits,  under  a  penalty  of  50/.,  any  banker  issuing  any 
promissory  note,  payable  to  bearer,  OQ  demand,  and  liable  to  any  of  the 
stamp  duties  imposed  by  that  act,  with  tJu  datt  printed  therein. 

Before  Bank  of  England  notes  were  made  a  legal  tender,  as  before 
stated,  a  country  bank  note  in  this  form  : — "  Pontefract  Bank,  £5:5:0. 
I  promise  to  pay  to  Bacon  Prank,  Esq.,  five  guineas  on  demand,  here  in 
cash  or  Bank  of  England  notes,  &c,"  was  held  not  to  be  a  promissory 
note  within  the  statute  of  Anne,  so  as  to  render  the  maker  liable  to  the 
holder.  And  so  where  bank  notes  were  made  payable  to  bearer  on  de- 
mand, with  the  same  alternative.^/)  Nor  in  case  of  bankruptcy,  could 
he  prove  either  on  the  notes,  or  for  money  had  and  received. (c) 

A  bank  note,  promising  to  pay  at  a  particular  place,  must  be  presented 
at  that  place,  in  order  to  entitle  the  holder  to  payment  from  the  bankers, 
unless  they  discharge  the  holder  from  such  presentment  and  demand  ',(/) 
in  suing  the  bankers  on  the  note,  to  aver  that  they  became  insolvent,  &c, 
will  not  suffice  to  show  a  discharge,  or  dispensation  with  presentment  and 
demand. (/) 

Country  bankers  are  not  liable  to  an  action,  if  they  pay  their  notes, 
upon  presentment,  with  Bank  of  England  notes,  so  long  as  Bank  of  Eng- 
land notes  are  a  legal  tender  every  where,  but  by  the  Bank  of  England 
and  its  branches ;  but  they  are  liable,  if  they  refuse  to  pay  their  own 
notes,  otherwise  than  by  other  country  bank  notes,  or  if  they  insist  on 
r*_in<n  *Pay^n8  by  any  other  mode  than  in  such  money  or  currency  as 
L         -»  constitute  a  legal  tender,  in  discharge  of  an  ordinary  debt.(//) 

Two  persons  reside  at  Darlington;  one  requests  the  other  to  give  him 
change  for  a  Sheffield  Bank  note,  which  the  other  does,  on  Saturday 
evening;  on  Monday  morning  following,  this  bank  opens  for  two  hours, 
and  then  stops  payment;  there  was  no  evidence  that  the  note  had  ever 
been  presented  for  payment  at  the  Bank,  but  the  taker  of  the  note  on  the 
Monday  sent  it  back,  desiring  a  return  of  his  money,  which  was  refused. 

The  court  considered  the  person  taking  the  note,  in  such  circumstances, 
to  be  unilir  ;m  obligation  to  give  prompt  notice  to  the  party  from  whom 
he  took  it,  of  the  Btoppage  of  the  bank,  and  tender  the  note  back  to  him, 
and  that  in  this  case  he  had  done  all  that  was  necessary,  in  order  to  en- 
title him  to  recover  the  money  he  had  given  for  the  note;  although 
there  had  been  do  presentment  at  the  banker's. (^) 

Here,  it  might  well  be  considered,  that  the  tender  of  the  bank  note  in 
return,  seeing  that  it  was  the  note  of  B  bank  situate  at  some  distance  from 
'he  pli oi  residence  of  the  parties,  was  made  within  a  reasonable  time  for 

(c)  See  note  (e),  preceding  page. 

Ei  parte  tmeson,  2  Rose,  225.  [e)   Fv\  parte  Davison,  Buck,  R.  31. 

Bowes  v.  Howe,  r.  Taunt.  30,  Exch.  Ch. 

Grigby  v.  (lakes,  2  B.  &  P.  526.     This  subject  is  more  fully  gone  into  under 
the  head  of  cheque*,  supra,  pp.  33-35.  (Aj  Turner  v.  Stones,  1  D.  &  L.  122. 


COUNTRY    BANKS,    AND    BANK    NOTES.  293 

presentment  at  the  bank,  and  as  the  change  was  given  for  the  note  as  a 
favour,  it  was  wholly  within  the  principle  above  submitted  as  holding  in 
such  cases;  viz.,  that  in  such  cases  cash  is  always  given,  subject  to  the 
implied  promise  to  return  it  in  case,  without  laches  of  the  receiver  oi 
the  note,  the  bank  stops  payment  before  he  has  a  reasonable  opportunity(v) 
for  getting  the  money  from  the  makers.  To  rule  otherwise  must  throw 
upon  the  receiver  the  burden  of  incurring  trouble  *or  expense,  pMnq-i 
in  taking  or  sending  the  note  to  be  presented  for  payment  at  a  L  J 
distant  place,  without  any  corresponding  advantage  to  him  : — to  imply 
a  promise,  without  consideration,  is  what  the  law  never  does. 

Bank  notes  are  transferable,  by  delivery  merely,  and  the  person  trans- 
ferring is  not  liable  on  the  instrument,  there  being  no  indorsement,  to  the 
transferee  or  taker. 

Nor,  as  it  appears,  is  he  liable  on  the  consideration,  for  which  the 
bank  note  was  given,  if  it  turns  out  to  be  of  no  value  in  the  transferee's 
hands,  in  consequence  of  the  failure  of  the  bankers,  who  issued  and  pro- 
mised to  pay  it;  for,  by  the  delivery,  without  indorsement,  there  prima 
facie,  has  taken  place  a  sale  of  the  instrument;  the  one  party  hands  over 
the  goods,  or  whatever  else  formed  the  consideration,  for  paying  over  the 
instrument  representing  the  value,  or  agreed  price  of  the  goods,  &c,  the 
other  party  hands  over  the  note,  the  whole  forming  one  transaction  ;  and 
the  law  does  not  imply  that  he  guarantees  the  solvency  of  the  bankers. (/.-) 
Antecedent  Debt. — If,  however,  a  country  banker's  note,  be  handed 
over  on  account  of  a  previously  existing  debt,  the  note  is  not  considered 
as  sold ;  therefore,  if  the  note  be  presented  in  due  time  at  the  banker's, 
and  the  bankers  having  stopped  payment,  it  is  not  paid,  and  due  notice 
of  the  dishonour  of  it  is  given  to  the  transferor,  the  transferee  may  have 
recourse  to  his  original  remedy  for  the  antecedent  debt  ;{l)  for  the  credi- 
tor is  entitled  to  cash,  and  if  he  takes  notes,  that  is  out  of  favour  to  the 
debtor,  and  it  will  be  inferred,  without  there  be  evidence  to  the  contrary, 
that  the  notes  were  agreed  not  to  be  payment,  if  they  turn  out  to  be  of 
no  value,  *without  laches  in  presenting,  or  other  default  of  the  p^Q-] 
taker.     Perhaps  this  may  be  a  sufficient  ground  to  rest  the  ex-  L 
ception  (if  it  is  one)  to  the  rule  upon  ;  but  be  that  as  it  may,  the  excep- 
tion seems  to  stand  upon  authority ;  though  the  rule  is  seemingly  clear, 
that  a  banker's  note,  payable  to  bearer,  on  demand,  delivered  without 
indorsement,  not  in  payment  of  a  debt  already  due,  but  by  way  of  a 
single  transaction,  as  of  exchange  for  goods,  or  for  other  notes,  or  for 
money,  (in  other  words  changed,)  is  sold  to  the  party  receiving  it,  who 
takes  it  with  all  risks,  the  transaction  being  bona  fide.(m) 

(i)  As  to  reasonable  time,  see  Appleton  v.  Sweetapple,  3  Dougl.  137   141  ;  see 
also  Co.  Litt.  56 ;  2  Inst.  222  ;  1  T.  R.  268  ;  Stra.  1178,  1248.     Form  of  deposition 


gers 

33m1Catidge1v3"Allenby,  6  B.  &  C.  373  ;  Ward  v.  Evans,  2  Ld  Raym   928 ;  so  6 
B.  &  C.  373  ;  per  Pratt,  C.  J.,  Moore  v.  Warren,  Stra.  415;  per  King,  C.  J.,  Holme  v 

Ba(m)'  Fenn  v.  Harrison,  3  T.  R.  759 ;  Evan?  v.  Whyte,  5  Bing.  485  ;  see  3  B.  &  C. 
445,  446. 


'J04         GRANT  ON  THE  LAW  OF  BANKING. 

In  either  ease,  whether  the  bank  note  be  taken  at  the  time  of  the  sale, 
r  for  an  antecedent  debt,  if  the  transferee  can  show  fraud,  as  that 
the  transferor  knew  the  banker  to  be  in  a  state  of  insolvency  at  the  time, 
the  former  may  recover  from  the  latter,  (n) 

The  proposition  has  lately  been  said  not  to  be  generally  true,  that  when 
bank  notes  are  paid,  they  arc  always  paid  at  the  risk  of  the  party  taking 
them,  except  where  they  are  paid  in  respect  of  an  antecedent  debt;(o\ 
and  there  seems  to  he  no  doubt  in  the  courts  that,  in  ordinary  cae 
person  asking  and  receiving  change  for  a  bank  note,  which  proves  worth- 
I-  bound  to  return  the  money,  if  the  other  party  be  not  guilty  of 
laches. 

The  situation  of  a  banker  who  gives  an  accountable  receipt,  or  credit 
in  account,  for  so  much  money  as  a  country  bank  deposited  or  paid  in, 
promising  to  pay  it,  is  that  of  a  person  who  makes  a  promise,  on  a  con- 
sideration, which  must  be  taken  as  failing,  when  the  notes  turns  out  not 
to  be  available  to  realize  the  money  which  it  purports  to  stand  for,  and 
on  a  representation,  though  not  a  warranty,  of  its  being  good  for  which. 
In   takes  it. 

p.,. ,, ,-.  It  is  true  that  the  accountable  receipt,  in  the  one  case,  or  *the 
L  -I  entry  giving  credit  in  account  in  the  banker's  book,  on  the  other, 
would  be  prima  facie  evidence  to  show  that  cash  was  actually  received 
by  the  bank,  with  whom  the  notes  were  deposited;  but  then  this  receipt 
is  shown  to  have  been  given  under  a  mistake  of  fact,  when  it  is  shown  to 
have  been  given  under  the  idea  that  the  notes  were  as  good  as  money,  and 
the  bank  may  always  show  this,  and  that  no  money  was  ever  received  by 
thein.(o)  This  is  not  a  case  where  there  was  anything  in  the  shape  of  a 
purchase  of  the  notes. 

However,  the  distinction  has  been  laid  down  so  often  between  taking 
bank  notes  in  payment  of  an  antecedent  debt,  which  is  not  ipso  facto 
extinguished,  (p)  and  taking  them  over  a  counter,  or  in  immediate  pay- 
ment for  a  thing  which  passes  at  the  time — that  it  is  too  much,  it  is 
■mbmitted,  to  say  that  the  general  position  can  be  shaken. 

As  has  been  noticed,  when  country  bank  notes  are  taken  at  the  same 
time  that  goods,  &c,  are  sold,  or  consideration  of  any  sort  passes,  all  in 
one  uninterrupted  transaction,  the  transferor  of  the  bank  notes  is  not 
considered  as  guaranteeing  the  solvency  of  the  banking  house  that  issues 
tin  in,  and  the  transferee  takes  them  for  better  and  for  worse. 

Hut  although  the  transferor  does  not,  in  these  circumstances,  take  the 

risk   of  the   solvency  of  the  makers  of  the  notes,    he  does  in  all  cased 

pi  when-  there  is  an  express  agreement  to  the  contrary,  or.  perhaps, 

circumstances  from   which  a  jury  might  infer  an  intention  to  the  con- 

i  warrant  the  genuineness  of  the  instrument,  and  must  in  all  such 

hear  the  loss,  if  it  turns  out  to  be  forged.  Thus,  where  a  banker 
discounts  Navy  Hills  for  A.,  and  they  turn  out  to  be  forged,  though  both 
parties  be  ignorant  at  the  time  of  the  discount,  of  anything  being  wrong, 

(n)  Per  Bayley,  •'..  Oamidge  v.  allenby,  ''>  B.  &  C.  373;  see  10  Q.  B.  713. 
.    Timmie  v.  Gibbins,  21  I,.  J.,  Q.  B.  402. 

(p)  Sec  the  cases  supra,  ami  Simpson  v.  Sikea,  <>  M.  &  Selw.  295. 


COUNTRY  BANKS,  AND  BANK  NOTES.        295 

the  bankers  may  recover  against  A.,  and  so  they  may,  if  they  have  received 
in  payment  bank  notes  which  turn  out  to  be  forged. (</) 

^Presentment  at  Bank. — It  is  not  to  be  doubted,  however,  „....,, 
that  the  parties  on  every  occasion  of  handing  over  bank  notes,  L 
whether  upon  a  consideration  antecedent  or  concomitant,  would  cer 
tainly  be  bound  by  an  express  agreement  providing  for  the  case  of  insol- 
vency of  the  maker  of  the  notes ;  in  either  case,  the  party  receiving  the 
notes  may  stipulate — "  I  will  not  bear  the  loss,  in  case  the  banker  has 
stopped  payment  within  a  reasonable  time  for  presentment  of  them,  and 
before  they  are  paid."  So  in  case  of  a  person  asking  another  to  give 
him  change  for  a  bank  note,  it  must  be  that  the  note  must  be  inferred 
to  be  taken  conditionally,  that  the  taker  shall  not  bear  the  loss,(r)  pro- 
vided he  does  all  that  is  necessary  on  his  part,  but  not  otherwise ;  there- 
fore, he  must  present  the  notes  within  due  time  (or,  perhaps,  he  may 
return  to  the  person  from  whom  he  took,  in  due  time, )(s)  in  order  to 
be  discharged.  (^) 

As  to  what  is  due  time  to  present  for  payment  a  banker's  note,  after 
the  receipt  of  it,  various  cases  have  been  decided.  The  following  are 
some  of  the  principal  of  them  : — A.  sends  his  servant  to  a  town,  fourteen 
miles  from  his  residence,  to  sell  cattle ;  the  servant  sells  them,  and  takes 
country  bank  notes  in  payment  from  B.  (this  was  about  one  o'clock  on 
Friday  afternoon,)  and  paid  them  over  to  his  master  (who  had  been  from 
home  the  whole  of  Friday)  on  settling  with  him  on  Saturday  evening, 
A.  presents  the  notes  the  following  Monday  morning  at  the  banking- 
house,  when  it  is  found  that  the  bank  had  stopped  payment  on  the  pre- 
vious Saturday,  between  three  and  four  o'clock.  Under  these  r* 4 1 3-1 
^circumstances,  the  court  considered  A.  was  entitled  to  recover  L  J 
from  B.  the  amount  of  the  notes,  as  A.  had  not  been  guilty  of  such 
laches,  by  not  presenting  the  notes  on  Saturday  morning,  as  made  the 
notes  his  own,  but  intimated  that  the  result  would  probably  have  been ' 
different  if  the  servant  had  been  identified  with  the  master.(w)  It  seems 
if  the  master  had  himself  sold  the  cattle,  and  taken  the  notes  for  them, 
in  one  uninterrupted  transaction,  he  would  at  once  have  made  his  election 
to  take  the  notes  as  payment,  according  to  the  doctrine  above  stated,  so 
that,  independently  of  the  question  of  laches,  he  must  in  that  case,  have 
borne  the  loss.  The  court,  if  the  case  is  duly  reported,  do  not  seem  to 
have  had  present  to  their  minds  the  above-mentioned  distinction  between 
giving  bank  notes,  in  completion  of  a  transaction  of  sale,  and  giving 
them  in  discharge  of  a  precedent  debt. 

It  is  quite  clear  in  general,  that  in  case  of  a  country  bank  note,  made 

(g)  Fuller  v.  Smith,  Ry.  &  M.  49  ;  Smith  v.  Mercer,  6  Tau.  76 ;  Jones  v.  Ryde,  1 
Marshall,  157  ;  Bruce  v.  Bruce,  id.  165,  distinguishable  from  Price  v.  Neale,  3  Burr. 
1354,  because  the  bill  was  paid  by  a  person  whose  peculiar  duty  it  was  to  see  the 
bill  was  a  good  one;  see  Bull.  N.  P   277  ;  1  Salk.  124. 

(r)  See  Van  Wort  v.  Woolley,  3  B.  &  C.  446,  447  ;  Timmis  v.  Gibbins,  21  L.  J., 
Q.  B.  405. 

(s)  PerLd.  Lyndhurst,  C.  B.,  1  Cro.  &  M.  641,  and  Cur.  643. 

(t)  See  Rogers  v.  Langford,  1  Cro.  &  M.  637  ;  Henderson  v.  Appleton,  cited  id. 
642. 

(m)  James  v.  Houlditch,  8  Dowl.  &  R.  3. 


29G  G  R  A  X  T    OX    THE    L  A  W    0  F    B  A  X  K  I  X  G. 

{livable  at  the  banking  boose,  there  must  be  a  presentation  for  payment 
there,  before  a  right  of  action  can.arise,(x)  and  merely  alleging  the 

insolvency  of  the  house  as  a  reason  fur  nonpresentment  is  impertinent  ; 
nor  will  a  declaration  by  the  banker,  that  he  will  not  pay  his  notes,  dis- 
pense with  presentment ;(//)  the  note  must  be  presented,  and  a  demand 
of  payment  made  at  the  banking  house,  unless  the  bankers  discharge  the 
holder  from  presentment  and  demand  ;(//)  nor  is  it  a  sufficient  excuse  to 
Bay  that  the  banker  was  from  home,  had  absconded,  and  left  no  effects  at 
the  banking  house. (z) 

If  bank  notes  be  transferred  in  payment  of  a  debt,  and  it  turns  out 
that,  at  the  time  of  the  transfer,  though  unknown  to  the  creditor,  the 
bankers  had  already  stopped  payment  and  were  insolvent,  and  there  was 
r*4.14~l  no  Presentroent  at  the  *banking-house,  and  demand  of  payment, 
L  J  on  the  one  hand,  but,  instead,  the  taker,  within  a  reasonable 
time,  gave  the  party  handing  over  the  notes,  notice  of  this  fact,  and 
offered  to  return  them,  which  they  refused,  this  is  a  sufficient  founda- 
tion to  entitle  the  transferee  to  recover  in  debt  for  the  original  consi- 
deration, for  which  the  notes  were  transferred. (a) 

The  presentment,  if  made,  must  be  in  reasonable  time;  there  must 
be  no  laches,  otherwise  the  holder  is  considered  as  making  his  election 
thereby  to  take  to  the  notes. (i)  In  cases  between  a  holder  of  bank 
notes,  and  the  party  from  whom  he  has  received  them  (not  being  the 
makers,)  it  seems  that  to  go  through  the  form  of  presentment  is  always 
immaterial,  after  insolvency  and  stoppage  by  the  bankers,  provided 
that  within  a  reasonable  period — a  period  for  this  purpose  may  be 
reasonable,  which,  nevertheless,  exceeds  the  time  within  which  present- 
ment ought  to  be  have  been  made — the  transferee  gave  the  other  party 
notice  that  the  notes  were  valueless,  and  offered  to  return  thein.M 

There  is,  however,  a  distinction  between  the  situation  of  a  person  with 
whom  notes  are  deposited,  and  one  to  whom  they  are  paid,  in  discharge 
of  an  antecedent  debt,  in  the  event  of  the  notes  being  worthless:  thus, 
if  A.  deposit  notes  of  a  country  bank  with  another  country  bank,  taking 
the  accountable  receipt  of  the  latter  for  the  sum  represented  by  the 
notes,  and  it  turns  out  that  the  notes  are  worthless,  and  the  bank,  as 
soon  as  they  learn  this,  give  notice  to  the  depositor,  and  offer  to  return 
the  notes,  but  are  refused,  neither  the  bank  nor  the  depositor  being 
aware  at  the  time  of  the  deposit,  that  the  bankers,  who  made  the  notes, 
had  then  stopped  payment;  the  depositor  cannot  have  an  action  against 
the  banking  house  with  whom  the  notes  were  deposited,  cither  for  money 
r*n-T  'ent>  or  money  had  *and  received. (</)  It  was  sought  to  be  made 
L         -I  out  that  the  circumstance  of  tin    aeeountable   receipt  showed  a 

(x)  Saunderson  v.  Bowes,  14  East,  500;  Dickenson  v.  Bowes,  10  East,  110  ;  see 
3  Campb.  247. 

(v)   Howe  v.  Bowes,  5  Tau.  30;  see  8  C.  B.  759;  6  M.  &  Selw.  295. 
(z)  Sande  v.  Clarke,  8  0.  B.  7.r,i. 

(a)  Robson  v.  Oliver,  10  Q.  B.  704. 

(b)  Camidge  v.  Allenby,  C  B.  k  C  373;  see  10  Q.  B.  713,  716;  16  M.  &  W.  232. 

(c)  Per  Eric,  J.,  10  Q.  B.  717. 

!  immie  v.  Gibbine,  21  L.  J.,  Q.  B.  403. 


COUNTRY  BANKS,  AND  BANK  NOTES.        207 

trg&tment  of  the  notes  as  money,  but  the  court  rejected  that  as  a  ground 
of  decision. 

Notice  of  Dishonour. — The  same  rule  as  to  notice  of  dishonour  of 
bills  of  exchange,  and  notice  of  dishonour  of  country  bankers'  notes,  has 
always  obtained ;  the  rule  is,  it  must  be  given,  by  the  post  which  leaves 
on  the  day  following  that  on  which  the  holder  gets  information  of  the 
fact. 

An  illustration  is  afforded  in  the  following  circumstances. 

A.  being  previously  indebted  to  B.  in  500?.  on  Friday,  about  eight  or 
nine  A.M.,  pays  to  B.,  at  his  residence,  at  Wantage,  4901.  in  notes  of 
the  Newbury  Bank,  and  10?.  in  a  note  of  the  Wantage  Bank,  B.  giving 
him  a  receipt  for  500?.,  on  tbe  back  of  the  promissory  note,  by  which 
the  loan  had  been  secured. 

B.  immediately  sends  450?.  of  the  notes  to  his  bankers  at  Wantage, 
with  orders  to  transmit  the  Newbury  Bank  notes  (which  were  made 
payable  at  the  bank  at  Newbury,  or  at  the  bank  of  Messrs.  Barnard, 
London,  on  demand)  to  London,  to  buy  an  exchequer  bill.  Wantage  is 
distant  from  Newbury  about  eighteen  miles,  and  was  a  two  days'  post 
from  one  place  to  the  other  :  the  post  left  Wantage  for  London  at  half- 
past  five  o'clock,  P.M.,  every  day,  except  Saturdays. 

When  B.'s  messenger  got  to  the  bank,  and  delivered  his  message, 
with  the  above  order,  one  of  the  partners  said  it  would  be  dangerous  to 
send  the  notes  to  London,  and,  therefore,  declined  or  refused  to  send 
them  by  post  that  evening',  but  offered  to  inclose  them  on  the  Saturday 
evening,  in  their  packet  which  they  usually  sent  in  the  course  of  their 
business  as  bankers,  two  or  three  times  a  week,  by  the  coach  to  London, 
and  which  packet  he  said,  *would  be  in  London  on  Monday,  p^g-i 
This  was  ultimately  agreed  to,  and  on  Saturday  evening  450?.  of  L  -1 
Newbury  Bank  notes  were,  by  the  bankers  at  the  Wantage  Bank,  cut  in 
halves,  and  one  set  of  halves  enclosed  in  their  packet,  and  transmitted 
the  same  evening  to  London.  They  usually  sent  their  notes  half  by  the 
coach,  and  half  by  the  post,  and  the  other  set  of  halves  were  sent  by  the 
post  on  Sunday  evening,  addressed  to  the  London  correspondents  of  the 
Wantage  Bank;  these  halves  reached  them  between  ten  and  eleven  a.m. 
on  the  Monday,  and  the  packet,  containing  the  other  halves,  was  deli- 
vered to  them  somewhat  later  the  same  day. 

The  Newbury  Bank  stopped  payment  the  same  morning,  but  their  cor- 
respondents in  London,  Messrs.  Barnard  &  Co.,  continued  to  pay  the 
Newbury  notes  the  whole  of  Monday,  but  not  afterwards,  and  the  notes 
in  question  would  have  been  paid  if  they  had  been  presented  in  course 
of  Monday.  When  they  were  presented  to  Barnard  &  Co.  on  Tuesday, 
they  were  dishonoured. 

Notice  of  the  stopping  of  the  Newbury  Bank  being  communicated  to 
B.,  on  the  evening  of  Monday,  he  immediately  sends  a  messenger  to  A.'s 
house,  who  states  it  to  A.'s  wife,  A.  himself  having  gone  to  bed ;  A., 
the  same  evening,  said  he  would  take  notes  again,  and  return  them  to 
the  person  from  whom  he  had  received  them.  He  afterwards  refused  to 
take  back  the  notes. 

In  an  action,  brought  against  him  by  B.,  it  was  held  that  B.  was 


298         GRANT  ON  THE  LAW  OF  BANKING. 

entitled  to  recover,  for  that  it'  the  notes  had  been  scut  direct  by  the  p<»t 
v  wbury,  they  would  not  have  been  paid,  as  the  bank  stopped  on 
Monday  ;  and  that  sending  the  half  notes  to  London  was  a  reasonable 
precaution,  and  one  which,  therefore,  the  plaintiff  had  a  right  to  adopt.(<  | 
r*J.T"H  Exchanging  Notes, — It  is  a  custom  among  country  bankers 
L  J  *who  reside  in  the  same  district,  to  exchange  each  other's  notes 
once  or  twice  a  week,  something  alter  the  same  plan  as  that  adopted  at 
the  London  clearing  house. 

This  is  a  great  convenience  to  all  parties,  and  has  the  same  effect  as 
the  practice  with  respect  to  the  clearing  house,  in  lessening  the  amount 
of  bank  notes  or  gold  required  for  the  circulation  of  the  district;  it  also 
opi  rates  as  a  check  to  a  redundancy  of  issues,  by  any  particular  bank, 
within  the  district. 

The  notes  of  such  bankers  as  reside  beyond  the  district,  when  they 
come  into  the  hands  of  the  bankers  within  the  district,  arc  not  sent  to 
the  issuers  of  them,  but  are  sent  at  once  to  London,  for  the  purpose  of 
presenting  for  payment  to  the  bankers  to  whom  they  are  addressed. 

A  mode  is  often  adopted  by  country  bankers,  of  making  payments  in 
London  for  a  customer,  by  which  they  avoid  stamp  duty ;  that  mode 
consists  in  advising  their  correspondents  that  a  certain  person  will  call 
on  them  for  a  certain  sum,  which  sum  is  paid  on  demand  by  the  Loudon 
banker,  to  such  person,  on  his  signing  a  cheque  for  the  amount;  it  being 
lawful  for  a  person  in  London,  to  draw  on  a  London  banker  at  sight, 
without  the  checpue  being  subject  to  stamp  du'ty.(/) 

Bankruptcy. — Where  one  of  two  country  banks  becomes  bankrupt, 
each  at  that  moment  having  in  their  hands  bank  notes  of  the  other, 
which  together  with  other  securities,  are  reciprocally  of  nearly  tin-  Bame 
amount,  and  the  assignee  of  the  bankrupt  house,  knowing  this,  presents, 
and  obtains  payment  of  the  notes,  &c,  of  the  solvent  bank  at  their  Lou- 
don agents,  who  are  unaware  of  the  relative  situation  of  the  two  banks, 
the  money  was  held  to  be  recoverable  by  the  solvent  bankers  from  the 
assignee,  it  being  shown,  that  on  the  balance  of  accounts  between  the 
r*118T  bankers,  not  only  was  nothing  owing  *by  the  solvent  bank,  but 
L         J  there  was  a  sum  of  22/.  in  their  favour. lg\ 

Messrs.  Forsters,  bankers  at  Carlisle,  had  an  agreement  with  Surtees, 
bankers  at  Newcastle-upon-Tyne,  by  which  Forsters  were  weekly  to 
transmit  to  the  Newcastle  Bank  all  the  notes  of  the  Newcastle  Bank, 
and  certain  other  specified  hanks,  which  they,  Forsters,  might  have  in 
their  possession  ;  and  the  Surtees  were  in  ezohange  every  week,  to 
return  to  the  Carlisle  Bank  ;  and  any  balance  on  one  Bide  or  the  other, 
was  to  be  made  up  by  that  party  drawing  a  bill  on  a  banker  in  London, 
at  twenty  days,  iii  favor  of  the  other  party,  &c.  On  these  facts,  the 
bank  notes  bo  sent  by  Forsters,  were  held  to  constitute  a  debt  from 
Surtees,  to  the  Carlisle  Bank,  which  Surtees  might  pay  by  a  return  of 
bank  notes,  under  the  agreement  ;  but,  if  they  made  no  such  return,  or 
a  return  short  of  the  amount  due,  and  gave  no  bill  for  the  balance,  such 

■  |  Williams  v.  Smith,  2  B.  &  A.  496. 
(/  i,  -  Hist,  of  Banking,  295,  296. 

\g)  Bdwarde  r.  Newman,  l  15.  k  0.  418. 


COUNTRY    BANKS,    AND    BANK    NOTES.  299 

balance  was  a  debt  against  them,  which  was  provable  under  a  fiat 
against  Surtees,  on  an  act  of  bankruptcy  committed  after  the  time 
when  the  bill  for  the  balance,  if  drawn,  would  have  been  due,  and 
payable.  (A) 

It  was  clearly  laid  down  also,  that  the  Carlisle  bankers  could  not  main- 
tain  an  action  against  the  Newcastle  bankers,  after  the  latter  had  got 
their  certificates,  to  recover  damages,  as  for  a  breach  of  contract,  in  not 
performing  the  above  agreement. (&) 

The  Newton  Abbotts  bank  advanced  to  A.  500/.  upon  the  security  of 
his  promissory  note,  payable  on  demand,  with  interest,  and  dated  7th 
November,  1840.  17th  July,  1841,  the  bank  stopped  payment,  at  which 
time  A.  held  bank  notes,  and  interest  notes  of  the  bank,  to  the  amount 
(with  the  interest  due  on  the  notes)  of  58K.  5s.,  being  more  than  suffi- 
cient to  have  paid  and  discharged  A.'s  promissory  note  *and  r^,1(n 
interest ;  in  fact,  he  had  collected  such  notes  expressly  for  the  *-  J 
purpose  of  taking  up,  and  paying  his  promissory  note  with  Newton  Bank 
notes ;  and  for  these,  he  alleged,  that  he  had  given  full  value. 

The  bank  subsequently  without  notice  to  A.,  deposited  his  promissory 
note,  together  with  other  securities,  with  Messrs.  Williams,  their  corres- 
pondents in  London,  for  the  purpose  of  assuring  the  repayment  of  such 
sums  of  money  as  they  might  advance,  &c.,  to  the  Newton  Abbotts  Bank, 
&c,  and  Williams  &  Co.  held,  on  the  whole,  securities  belonging  to  the 
Newton  Abbotts  Bank,  to  a  greater  amount  than  the  balance  due  to  them 
from  the  Newton  Abbotts  Bank. 

Williams  &  Co.  then  compel  A.  to  pay  the  amount  of  his  promissory 
note  and  interest  to  them,  and  refuse  to  allow  him  to  set  off  the  notes  of 
the  Newton  Abbotts  Bank,  which  he  holds. 

A.,  in  ignorance  of  the  fact,  that  Williams  &  Co.,  hold  securities  to  a 
greater  amount  than  the  balance  due  to  them,  as  above  stated,  proves 
under  the  fiat  for  the  bank  notes  which  he  holds. 

The  assignees  of  the  Newton  Abbotts  bankers,  then  pay  Williams  & 
Co.  what  is  due  to  them,  after  having  credit  for  the  sum  paid  by  A.  on 
the  promissory  note,  and  take  from  Williams  &  Co.,  all  the  remaining 
securities. 

Now,  as  A.  would  have  a  right  of  set-off  against  the  bankrupts,  if  he 
had  continued  in  possession  of  the  promissory  note,  he  could  not  be  de- 
prived of  that  right  by  his  ignorance  of  the  state  of  accounts  between 
Williams  &  Co.,  and  the  bankrupts,  and  so  the  court  held  the  assignees 
to  be  bound,  on  his  withdrawing  his  proof,  to  repay  to  him  the  amount 
of  his  promissory  note,  on  his  giving  up  Newton  Abbotts  Bank  notes  to 
the  same  amount. Ci\ 

Proof. — With  respect  to  proving  on  the  bankruptcy,  upon  i-^OI 
*the  bank  notes  of  the  bankrupt,  one  or  two  points  have  been  L  "  J 
settled. 

It  has  been  questioned,  whether  a  claim  founded  on  notes  of  a  country 

(h)  Forster  v.  Surtees,  12  East,  605. 

(i)  Ex  parte  Staddon,  3  M.  D.  &  De  G.  256 ;  as  to  proving  in  bankruptcy  on 
bank  notes,  see  supra,  p.  379,  n.  (a). 


BOO        GRANT  ON  THE  LAW  OF  BANKING. 

banker,  payable  on  demand,  when  no  demand  bas  been  made,  would  sup- 
port a  fiat  against  the  bankers  ;  but,  at  any  rate,  it  seems  clear,  that 
when  Buch  notes  were  given  id  payment  of  an  antecedent  debt,  the  cre- 
ditor may  rely  on  that  debt,  if  the  notes  be  really  worthless. (A) 

A  partner  in  a  bank,  who  Bigns  the  bank  notes  "For  A.,  B.,  &o.M 
(stating  aU  the  names  in  the  firm,  and  appending  his  signature,)  cannot, 
on  the  bankruptcy  of  the  partnership,  be  liable  to  proof  against  his  sepa- 
rate estate,  on  such  note.(/) 

A  person  buying  up  bank  notes  of  the  firm,  after  its  bankruptcy,  can- 
not prove  for  them,  unless  he  shows  that  the  vendors  of  them  were  seve- 
rally entitled  to  prove,  in  respect  of  the  notes  they  sold  ;(m\  but,  a  per- 
son owing  a  debt  to  a  banking  house  may,  even  alter  they  have  actually 
stopped  payment,  buy  up  their  bank  notes,  for  the  purpose  of  setting  off 
their  amount  against  his  debt  to  them,  not  having  at  the  time  notice  of 
an  act  of  bankruptcy  by  either  of  the  members  of  the  firm  ;|///)  but  he 
could  not  set  off  notes,  taken  after  he  knew  of  an  act  of  bankruptcy  by 
some  of  the  partners. («) 

One  person  may  prove,  on  behalf  of  a  large  number  of  creditors,  each 
holding  notes  of  the  bank,  under  similar  circumstances  with  himself, 
provided  that  he  does  not  attempt  to  interfere  in  the  choice  of  assignees, 
or  with  the  certificate ;(o)  but,  these  modes  of  proof  are  only  allowed 
r*J.->n  wnere  necessity  or  consent  is  the  foundation  ;  Lord  Eidon,  in  one 
L  ~  J  *case,  required  the  proof  to  be  made  in  the  name  of  every  one 
of  500  partners. (p\ 

Assignment  of  all  Estate,  dec. — Assignment  of  all  their  estate  and 
effects,  to  trustees,  for  the  benefit  of  creditors,  by  bankers,  who  were  then 
in  failing  circumstances,  and  had  stopped  payment,  is,  although  the 
assignment  be  made,  merely  for  the  purpose  of  constituting  an  act  of 
bankruptcy,  valid,  as  an  act  of  bankruptcy,  and  it  seems  a  fiat  may  issue 
on  it,  although  the  affidavit  to  found  it  be  made  previously  to  the  date 
of  the  assignment. (q\ 

Lost  Notes. — Questions  sometimes  arise,  on  occasion  of  the  loss  of 
bank  notes,  which  are  to  be  decided,  it  would  seem,  at  first  view,  by 
reference  to  the  principle — where  a  person  has  his  option  whether  he 
will  affirm  an  act,  or  contract,  he  must  elect,  either  to  affirm,  <>r  disaffirm 
it  altogether;  he  cannot  adopt  such  part  of  it  as  may  be  for  his  own 
benefit,  and  reject  the  rest;  he  may  repudiate  the  idea  of  contract,  for 
instance,  and  bring  trover,  treating  the  transaction  as  a  tort  in  the  en- 
tirety ;  but,  if  he  treats  it  as  a  contract,  and  brings  his  action  accord- 
ingly, then  he  must  take  that  mode  of  viewing  the  matter,  rum  onere, 
and  must  admit  the  set-off  of  the  defendant,  if  he  has  one.(r) 

(k)  Simpson  v.  Sikes,  6  If.  &  Selw.  295,  312. 

i/)    Kx  parte  Clarke,  De  G.  Hank.  R.  153. 

K\  parte  Sogers,  Buck,  4'jO;  so  Ex  parte  Delawar,  3  Ir.  Eq.  R.  573;  Burgc 
on  Buret]  ship,  |>.  I i  J. 

w, ;    Dickson  v.  Cass,  1  B.  &  Ad.  343;   Haw  kin.  v.  Wliitten,  10  B.  &  C.  217. 
rdon,  l  .Meat.  k  A.  282  :  Ez  parte  Keys,  B  L.  J.,  Chanc.  11. 
(p)  Ex  parte  Bank  of  England,  2  Gly.  .v  J.  362  ;  see  Ex  parte  Child,  1  Atk.  ill. 
Simpson  v.  Sikes,  6  M.  ft  Selw.  295.     As  to  notice  of  an  act  of  bankruptcy 
by  banker,  Ex  parte  Halifax,  2  Mont.  D.  &  D.  5  1 1. 
(r)  Smith  v.  Hudson,  4  T.  R.  211. 


COUNTRY  BANKS,  AND  BANK  NOTES.        301 

An  action  of  trover  was  brought  by  the  owner  of  a  lost  bank  note, 
under  the  following  circumstances  : — The  owner's  clerk  lost  the  note,  a 
woman  found  it  in  the  street ;  she  requested  the  defendant's  son  to  take 
it  to  the  bank,  and  he,  by  the  defendant's  directions,  got  change  for  it. 
The  note  was  for  207. ;  twenty  sovereigns  were  given  in  change.  Of 
these,  eighteen  were  given  back  to  the  woman,  who  was  afterwards  taken 
before  a  magistrate,  and  seven  sovereigns,  *part  of  the  eighteen,  r^499-, 
found  upon  her,  and  given  back  to  the  owner  of  the  note.  He  L  J 
sued  the  defendant  for  the  remaining  13£.,  and  the  jury  found  a  verdict 
for  13£. ;  and  it  was  moved  to  enter  a  nonsuit,  on  the  ground  that  by 
taking  back  the  seven  sovereigns,  the  plaintiff  had  treated  the  transac- 
tion as  a  matter  of  contract  between  him  and  the  woman,  there  was  an 
adoption  and  ratification  of  what  she  had  done ;  but  it  was  held,  not  to 
operate  so,  but  only  to  go  in  mitigation  of  damages. (.s) 

If  bank  notes  are  lost,  the  finder  acquires  no  property  so  as  either,  to 
enable  him  to  defend  an  action  of  trover  against  the  true  owner,  or  to  sue 
the  makers.  Still,  as  such  instruments  pass  by  delivery,  any  one  to 
whom  the  finder  transfers  the  note,  provided  such  transferee  takes  it  with- 
out fraud,  may  do  both  ;  he  may  retain  the  note  against  the  loser,  and  he 
may  compel  payment  from  the  maker. (t\ 

If  a  bank  note  be  lost,  or  stolen  out  of  a  letter  put  into  the  post-office, 
no  action  lies  to  recover  it  or  its  value  at  the  suit  of  the  loser,  against 
the  Postmaster-General. (u\ 

On  the  trial  of  an  indictment  for  forgery,  the  loss  of  the  bank  note 
alleged  to  have  been  forged,  is  not  necessarily  a  bar  to  conviction ;  thus, 
where  a  prisoner  swallowed  the  bank  note  that  he  was  indicted  for  having 
forged,  it  was  held,  that  he  might  have  been  convicted  without  the  pro- 
duction of  the  bank  note;(;e)  it  seems,  however,  that  the  owner  of  a  de- 
stroyed bank  note  could  not  recover  in  a  civil  action  against  the  makers ; 
or  at  least,  it  may  be  said  to  be  a  question  not  wholly  without  doubt,(_y) 
and  he  was  practically  obliged  to  have  recourse  to  a  court  of  equity,  in 
most  instances;  but  now  it  is  enacted,  with  respect  to  all  negotiable  in- 
instruments,  to  be  "  lawful  for  the  court,  or  a  judge,  in  actions  pjcjoon 
*founded  thereon,  to  order  that  the  loss  shall  not  be  set  up,  pro-  L 
vided  an  indemnity  is  given  against  the  claims  of  any  other  person  upon 
it.» 

Also,  if  part  of  a  note  was  lost,  it  was  the  rule,  apparently,  not  to  allow 
the  owner  of  the  other  half  to  recover,  if  he  could  not  either  produce  an 
entire  bank  note,  or  prove  that  the  other  half  had  been  actually  de- 
stroyed ;(a)  but  the  new  statute  will  be  equally  applicable  in  this  case, 
if  indeed,  it  would  not  now,  independently  altogether,  be  a  good  defence 
for  the  bankers  to  show,  that  they  had  paid  the  amount  once  to  the 
original  owner  of  the  whole  note,  upon  his  presentment  of  his  half;  for 

(«)  Burn  v.  Morris,  4  Tyiw.  486.  (t)  Byles  on  Bills,  297,  6th  edit, 

(w)  Whitfield  v.  Lord'Le  Despencer,  Cowp.  754. 
(z)  Anon.  cor.  Buller,  J.,  cited  2  Campb.  211. 

(y)  Compare  Hansard  v.  Robinson,  7  B.  &  C.  90,  with  Woodford  v.  Whiteley, 
Moo.  &  M.  517  ;  Wain  v.  Bailey,  10  A.  &  E.  616. 

(z)   17  &  18  Vict.  c.  125,  s.  87 ;  see  24  L.  J.,  Chanc.  624. 
(a)  Mayor  v.  Johnson,  3  Campb.  324. 


302         GRANT  ON  THE  LAW  OF  HANKING. 

although  the  holder  of  the  lost  half  mighl  show,  that  it  came  to  his  pos- 
session bona  fide,  still  it  is  said,  thai  the  taker  of  a  half  note  necessarily 

takes  under  suspicious  circumstances,  and   lie  is  not  bound  to  take  the 
half  note  at  all;  he  ought  to  bear  the  loss,  it  seenis.(i) 

Hank  of  England  notes  cannot  1"'  followed  by  the  legal  owner  into  the 
hands  of  a  bona,  fide  bidder,  fur  good  consideration,  without  ootic< 
and  the  holder  of  a  Bank  of  England  note  is,  prima  facie,  entitled  t<> 
prompt  payment  of  it,  and  cannot  he  affected  by  the  previous  fraud  of 
any  former  holder  in  obtaining  it.  and  therefore  the  payment  cannot  he 
refused,  when  it  is  presented,  unless  the  bank  can  show  that  he  was 
privy  to  that  fraud. (J) 

If  A.  pays  a  bank  note  to  B.,  who  pays  it,  in  discharge  of  a  debt,  to 
<'.,  who  presents  it  at  the  Bank  of  England,  where  it  is  stopped,  on  the 
ground  that  it  has  been  fraudulently  obtained;  and  then  A.  pays  the 
amount  to  C,  in  consideration  that  his  debt,  due  from  B.,  had  not  been 
r*4'U~|  discharged,  ^partly  through  his  (A.'s)  means;  still  A.  cannot 
L  "  J  recover,  in  trover,  against  the  Bank  of  England. (r)  The  stop- 
ping payment  does  not  appear  to  be  a  duty,  but  is  merely  an  accommo- 
dation rendered  to  the  public. 

A  money-changer,  changing  a  Bank  of  England  note,  which  had  been 
stolen,  but  giving  full  value  for  it,  taking  it  buna  fide,  not  having,  at  the 
time,  knowledge  that  it  had  been  stolen,  is  entitled  to  recover  from  the 
Hank  the  amount  of  the  note,  although  he  had  the  means  of  knowledge, 
if  he  had  taken  proper  care  of  certain  notices,  which  had  been  previously 
delivered  to  him. 

In  this  case,  the  money-changer  carried  on  business  in  Paris;  change 
was  given  by  him,  for  the  note  there  ;  and  he  had  received,  some  time 
before,  a  printed  advertisement,  stating  this  note,  among  others,  to  have 
been  stolen  from  Messrs.  A.,  in  England;  the  note  was  changed  about 
the  middle  of  the  year  next  following  that  in  the  course  of  which  he  had 
ived  the  notice.  (/) 

If  the  owner  of  a  banker's  note,  which  has  been  lost,  or  stolen,  stop 
the  payment,  on  that  ground,  and  then  demand  that  the  amount  shall  be 
paid  to  him,  the  banker  has  a  right  to  require  surety,  or  indemnity, 
against  the  demands  of  any  future  hearer,  who  may  present  for  payment 
before  he  pays  the  true  owner;  for  the  banker  would  not  ):«■  able  to  dis- 
pute the  right  of  any  future  hearer,  who  came  fairly  by  the  note,  to  pay- 
ment, and.  therefore, he  is  entitled  to  be  indemnified  against  the  eontin- 

(//)  See  Byles  on  Bills,  :;::•.  6th  flit. 

Vinlersun,  l.'iKa.-t.  1  :at  :  S.  ('.,  1  Rose,  199.  A.,  taking  for  good 
consideration,  and  bond  fide,  from  I'...  is  entitled,  though  is.  has  Btolen  the  note, 
Miller  v.  Race,  l  Burr.  452,  which  was  trover  against  tin-  clerk  t<>  whom  the  note 
v,  a  •  presented  for  paj  ment. 

(d\  Solomons  v.  Bank  of  England,  13  Bast,  135,  n. ;  see  1  Burr.  452;  Cowp.  197, 

L0  A.  .v  K.  7-  ). 
(e)  Benjamin  v.  Bank  of  England,  .'t  Campb.  417.     Tin-  bank  is  in  the  practice 
of  stopping  tin-  payment  of  a  note  that  it  has  notice  has  been  Btolen,  upon  receiv- 
i  indemnity  from  the  applicant,  and  this  has  been  declared  to  be  a  reasona- 
ble  practice.     Miller  v.  Race,  l  Burr.  460;  see  I  A.  &  B.  36. 

(/)  Raphael  v.  Bank  of  England,  25  I. .!..('.  B.  33 ;  compare  Solomons  v.  Bank 
land,  13  Bast,  L35  ;  and  S.  C.,  '■•  Bing.  418. 


COUNTRY    BANKS,    AND    BANK    NOTES.  ;;i .:; 

gency  of  the  note  being  presented  by  such  a  bearer  ',(g\  and  bhie  seems 
to  be  a  direct  consequence  of  the  law  as  laid  down  in  a  late  ease,  where 
the  holder  of  a  *stolen  Bank  of  England  note  for  500/.,  who  U»>k  r^lori 
it  in  Paris,  bona  fide,  and  for  full  value,  was  held  entitled  to  re-  L  -l 
cover,  even  though  he  took  it  in  circumstances  showing  negligence ;(//) 
for  if  such  holder  has  a  right  to  receive  from  the  banker  the  amount  of 
the  note,  to  lay  down  that  the  banker  is  bound  to  pay  the  amount  to  the 
true  owner,  in  the  first  instance,  would  be  to  expose  him  to  very  serious 
risk  of  being  obliged  to  pay  the  amount  twice  over. 

.  Now,  as  nothing  that  has  been  done,  or  omitted,  by  the  true  owner, 
or  by  the  innocent  holder  for  value,  can  make  it  just  that  the  banker 
should  incur  any  liability  greater  than  that  which  he  contemplated  in 
making  the  note,  viz.,  to  be  bound  to  pay  the  amount  of  it,  the  question, 
as  between  the  original  owner  and  innocent  holder,  for  value,  must  be 
decided  by  reference  to  the  rule : — where  one  of  two  iunocent  parties 
must  bear  a  loss,  that  loss  is  to  fall  on  the  party  who  has,  by  his  conduct, 
given  rise  to  it ;  and  this  is  the  party  who  has  allowed  the  note  to  be  lost 
or  stolen  from  him ;  or,  if  it  be  said,  the  loss,  or  theft,  was  an  accident, 
beyond  his  control,  and  such  an  event  as  no  human  foresight  could  pro- 
vide against,  or  prevent,  still  there  is  no  reason,  that  a  party  who  has  no 
share  in  causing  an  accident,  should  be  made  to  suffer,  or  to  repair,  the 
consequences  of  it.(/) 

To  support  an  action,  by  owner  of  lost  bank  notes,  against  persons  who 
have  got  them  into  their  hands,  without  giving  value,  it  is  not  absolutely 
necessary  for  the  plaintiff  to  give  direct  evidence  of  the  loss ;  if  such  cir- 
cumstances are  shown  as  to  satisfy  a  jury  of  the  fact  of  the  loss,  that  is 
sufficient.  (&) 

A  notice  of  the  loss  of  bank  notes  is  not  to  be  considered  as  of  per- 
petual force ;  and,  unless  such  notice  be  renewed,  it  will  be  a  question 
for  the  jury,  in  an  action,  by  the  owner,  *to  recover  the  lost  r;t.i9f,, 
notes,  whether,  if  the  party  heard  no  more  of  the  matter  for  a  L  "J 
year,  or  more,  he  might  not  fairly  infer  that  the  notes  had  been  re- 
covered.^) 

It  is  very  important,  however,  in  case  of  loss  of  bank  notes,  to  bear  in 
mind  the  general  principle :  if  a  person  find  lost  property,  and  keep  it, 
having,  at  the  time  of  finding  it,  no  means  of  discovering  the  owner ;  he 
is  not  guilty  of  larceny,  because  he  afterwards  has  means  of  finding  the 
owner,  and,  nevertheless,  retains  the  property  to  his  own  use.(///) 

If  the  finder  had  seen  the  notes  drop  from  the  owner's  pocket;  or,  if 
the  notes  had  had  the  name  of  the  owner  written  upon  them ;  or,  if  there 
had  been  other  similar  circumstances,  to  enable  the  finder  to  know  who 
was  the  owner,  at  the  moment  he  picked  up  the  notes,  that  would  have 
been  different. (m) 

(g)  Walmesley  v.  Child,  3  Burr.  1524,  cited. 

(h)  Raphael  v.  Bank  of  England,  25  L.  J.,  C.  B.  33  ;  see  Shee  v.  Clarke,  Cowp. 
200,  ace. 

(i)  See  per  Lord  Mansfield,  C.  J.  3  Burr.  1525,  per  Wilmot,  J.,  id.  1526. 

(k)  Holiday  v.  Sigil,  2  Car.  &  P.  176.        (I)  Snow  v.  Leathain,  2  Car.  &  P.  314. 

(to)  Reg.  v.  Dixon,  25  L.  J.,  Mag.  Cas.  39,  where  bank  notes  were  amongst  the 
lost  property,  and  the  finder  had  changed  them. 

February,  1857.— 21 


GRANT  OH  THE  LAW  OF  BANKING. 

Even  if  a  finder  instantly  appropriate  the  note,  animo  furandi,  but 
under  Buch  circumstances  a<  to  warrant  a  jury  in  finding,  that,  at  the 
time  of  the  appropriation,  he  really  believed  that  the  owner  could  neithei 
find  the  note  nor  be  fonnd  himself,  Buch  appropriation  is  not  larcen; 
but  the  jury  must  not  be  left  to  speculate  as  to  what  was  in  the  finder's 
mind,  at  the  moment,  without  any  evidence  for  them  to  build  a  conclu- 

In  case  "f  a  note  being  marked,  or  inscribed,  so  that  the  real  owner 
might  be  found,  it  seems,  there  must  be  proof  that  the  prisoner  can  read 
these  marks,  &c,  before  he  can  be  convicted,  £p)  or  that  he  got  them* 
I  to  him. 

Rule. — Under  the  law,  as  formerly  understood,  it  was  considered, 
r*±97i  that  the  rights  <>f  the  transferee  might  be  *affected  by  the  degree 
l         J  of  caution  that  he  used  in  taking  the  note.     Thus  the  following 

-   s  were  decided  : — 

The  porter  of  a  banking  house  has  stolen  from  him  a  307.  Bank  of 

nd  note,  as  he  is  passing  with  it,  in  his  pocket,  on  an  errand  of  his 

master's;  they  duly  advertize  the  loss,  and,  after  some  delay,  trace  the 

bank  note  t<>  the  possession  of  a  horse  dealer;  the  banking  house  suing 

him  in  trover,  to  recover  the  note,  or  its  value,  it  was  left  doubtful,  on 

the  evidence,  whether  he  had  admitted  receiving  it  from  his  bankers,  or 

from  a  stranger,  at   Doncaster  races,  for  bets  won;  but,  at  any  rate,  it 

red,  that  he  had  made  no  inquiry,  and  not  taken  the  number  of  the 

:   and  the  jury  having  found  a  verdict  for  the  bankers,  the  court 

granted  a  new  trial. (5) 

A  person  was  robbed,  23rd  December,  1825,  of  his  pocket-book,  con- 
taining  a  hill  of  exchange,  drawn  by  bankers,  at  Canterbury,  on,  and  ac- 
1  by  bankers  in  Loudon,  dated  21s1  November,  1825,  payable  thirty 
days  after  sight;  on  26th  December  he  advertised  his  loss,  stating,  in 
the  advertisement,  the  contents  of  the  pocket  book  to  be  of  no  use  to  any 
but  the  owner ;  30th  December,  he  gave  notice  to  the  acceptors,  and  re- 
quested  them  to  stop  the  bill;  20th  December  the  bill  was  presented 
at  the  Maidstone  Dank,  by  a  stranger,  who  said  he  Mas  son  of  the  in- 
dorser,  and  the  amount  was  thereupon  paid  in  the  bank  notes  of  that 
bank.  In  an  action,  by  the  loser,  against  the  Maidstone  Bankers,  it  was 
held,  that  the  proper  questions,  tor  the  jury,  were,  whether  the  plaintiff 
hail  used  due  diligence  in  making  public  his  loss;  and  whether  the 
bankers  had  acted  with  good  faith,  and  proper  caution,  in  cashing  tie 
bill.(r) 

Reg.  v.  Thurborn.  1  Den.  ('.  <".  388,  395,  396. 

Pet  Jerris,  C.  .1..  25  L.  .1..  .M.  C.  40  :  what  proper  direction  to  jury,  R< 
0.  0.  353. 
Uderaon,  l;  .  2  Den.  C.  C.  358. 
3n<      \.  Saddler,  3  Bing.  610.     In  another  cue,  where  the  porter  of  the 
Bank  of  England  note,  and  it  was  cashed  at  a 
branch  bank,  Bitnate  at  an  obscure  place,  called  Bourne,  in  Lincolnshire,  of  the 
defendant's  bank,  at  Sleaford  :  and  that  without  asking  any  questions  of  the  per- 
son presenting  the  bill,  ami  who  was  a  Btranger,  it  was   held  that   the  Sleaford 
bankers  were  liable,  due  advertisement  having  been  made.     Snow  v.  Peacock,  3 

Beckwith  v  Corral,  3  Bing.  411. 


COUNTRY    BANKS,    AND    BANK    NOTES.  305 

*So,  where  the  plaintiff  left  in  a  hackney  coach,  and  lost  a  r^ioq-i 
bank  post  bill  for  100/.,  and  dispersed  among  the  hackney  coach  L 
stands,  &c,  hand-bills,  describing  and  offering  a  reward,  &c,  and  also 
advertised  in  the  Morning  Advertiser  of  the  24th  Sept  cm  ho-,  about  eight 
days  after  her  loss,  and  early  on  that  day  a  stranger  presented  the  bill  at 
a  banking  house  at  Brighton,  and,  on  being  asked  his  name,  said  be  ^s•as 
going  a  journey,  and  wrote  on  the  bill,  in  a  very  illiterate  hand,  a  name 
and  address,  and  the  banker,  not  having  heard  of  the  loss,  cashed  the 
bill,  taking  the  usual  commission;  the  question  being  left  to  the  jury, 
nearly  as  above  stated,  and  a  verdict  found  for  the  plaintiff,  the  court 
held  the  banker  to  be  liable. (f) 

Present  Rule. — But  the  law  has  lately  been  laid  down  in  different 
terms,  and  the  courts  have  shown  a  desire  to  retrace  some  of  the  steps 
that  led  to  these  decisions.  Even  gross  negligence  in  taking  would  now, 
not  be  of  itself,  a  reason  why  a  taker  for  value  should  suffer.  Thus, 
where  six  Bank  of  England  notes,  for  500/.  each,  were  stolen  in  Novem- 
ber, 1852,  from  Brown  &  Co.,  in  Liverpool,  who  immediately  published 
notices  of  the  robbery,  and  of  the  numbers  of  the  notes,  in  the  French 
and  English  languages,  and  circulated  them  in  England,  France,  and 
other  countries ;  fresh  notices  to  the  same  effect,  being  published  in 
April,  1853 ;  one  of  these  last  notices  was  left  in  due  course,  in  1853, 
at  the  place  of  business  of  one  St.  Paul,  a  money  changer  in  Paris.  In 
June,  1854,  a  stranger  entered  the  shop,  and  asked  what  was  the  ex- 
change of  the  day,  and  produced  a  500/.  Bank  of  England  note ;  the 
file  of  notices,  kept  in  the  shop,  was  not  looked  at ;  but  the  stranger  was 
asked  to  write  his  name,  and  to  produce  his  passport,  and  St.  Paul  find- 
ing the  name  so  written,  and  that  in  the  passport,  to  agree,  gave  change 
for  the  note,  at  the  current  rate  of  exchange ;  St.  Paul  then  remitted 
the  note  to  his  correspondent  in  London,  who  presented  it  at  the  p^.xn 
*Bank  of  England,  and  was  refused  payment,  but  the  bank  was  L  ""J 
held  to  be  bound  to  pay,  on  the  ground  that  a  party  taking  a  negotiable 
instrument  bona  fide,  and  for  full  value,  is  entitled  to  recover  on  it, 
although  it  has  been  stolen,  and  he  took  it  negligently. (u) 

Forgery. — As  regards  the  forgery  and  passing  of  bank  notes,  knowing 
them  to  be  forged,  it  is  enacted  by  11  Geo.  IV.  &  1  W.  IV.  c.  GG,  s.  3, 
that  if  any  person  shall  forge  or  alter,  or  shall  offer,  utter,  or  dispose  of, 
or  put  off,  knowing  the  same  to  be  forged  or  altered,  (amongst  other  in- 
struments,) any  note,  or  bill  of  exchange,  of  the  Governor  and  Company 
of  the  Bank  of  England,  commonly  called  a  bank  note,  a  bank  bill  of 
exchange,  or  a  bank  post  bill,  or  any  indorsement  on,  or  assignment  of, 
any  bank  note,  bill  of  exchange,^)  or  bank  post  bill,  or  any  bill  of  ex- 
change, or  any  promissory  note  for  the  payment  of  money,  or  any  indorse- 
ment on,  or  assignment  of,  any  bill  of  exchange,  or  promissory  note  for 

(t)  Strange  v.  Wigney,  6  Bing.  677. 

(u)  Raphael  v.  Bank  of  England,  25  L.  J.,  O.  B.  33  ;  Bank  of  Bengal  v.  MCleod, 
7  Moo.  P.  C.  35:  Ex  parte  Bushell,  3  M.  D.  &  De  G.  658,  overruling  Gill  v.  Cubitt, 
3  B.  &  C.  466  ;  and  Down  v.  Hailing,  4  B.  &  C.  330 ;  see  Miller  v.  Race,  1  Burr. 
452;  Walmesley  v.  Child,  3  Burr.  1524. 

(x)  See  Johnson  v.  Windle,  3  Bing.  N.  C.  225. 


306        GRANT  ON  THE  LAW  OF  BANKING. 

the  payment  of  money,  or  any  acceptance  of  any  bill  of  exchange,  or  any 
undertaking,  warrant,  or  order  for  the  payment  of  money,  with  interest, 
in  any  of  the  casea  aforesaid,  to  defraud  any  person  whatsoever,^)  < 
Buch  offender  shall  he  guilty  of  felony,  &c.(z) 

Under  an  indictment  for  uttering,  it  may  be  proved  that  the  prisoner 
offered,  or  tendered,  the  note  in  payment,  or  that  he  actually  passed  it, 
or  otherwise  disposed  of  it  to  another  person. (a) 

A  conditional  uttering  has  the  criminal  qualities  of  any  other  uttering; 
r#xoA-« thus,  where  the  defendant  gave  a  forged  *acceptance,  knowing 
L  -J  it  to  be  so,  to  the  manager  of  a  bank,  where  he  kept  an  account, 
saying  he  hoped  this  bill  would  satisfy  the  hank,  as  a  security,  for  the 
balance  he  owed  them;  this  was  holden  a  sufficient  guilty  uttering.(A) 

In  indicting  for  offering  and  disposing  of  the  note,  &c.,  it  is  not  neces- 
sary to  allege  to  whom  it  was  offered. (c) 

When  the  authority  of  a  hanking  company,  to  draw  and  issue  notes, 
is  recognized  by  statute,  it  is  not  necessary  to  prove  it  by  the  charter  or 
otherwise.  (</) 

On  an  indictment  for  disposing  and  putting  away  forged  bank  notes, 
knowing  them  to  be  forged,  the  prosecutor  has  a  right  to  give  in  evidence 
the  fact  of  other  forged  notes  having  been  uttered  by  the  prisoner,  for 
the  purpose  of  proving  his  knowledge  of  the  notes  in  cpaestion  being 
forged  alsojM  and  delivering  to  another  person  a  forged  bank  note,  to 
be  put  off  or  passed  by  the  latter,  is  a  "disposing  and  putting  away," 
within  the  statute.^/) 

Formerly,  Buch  an  indictment  could  not  have  been  maintained  on  a 
bank  note,  promising  to  pay  in  cash,  or  Bank  of  England  notes. (</) 

In  case  of  forgery  of  an  order  for  payment  of  money,  made  on  hankers, 
the  instrument  may  be  described  in  the  indictment,  as  a  warrant  mid 
order.(K\  80,  an  instrument,  payable  to  the  order  of  A.,  and  directed 
■•At  Messrs.  P.  &  Co.,  bankers, "  is  properly  described  as  a  hill  of  ex- 
change.(A  Forging  a  bill  upon  a  bank,  payable  to  prisoner's  own  order, 
and  uttering  it  without  indorsement,  has  been  held  to  be  a  complete 
offence.  (_/) 

r*jo-i-]  *-^s  regards  larceny,  it  has  been  decided,  with  respect  to  bank 
L  '  -'  notes,  that  a  person  employing  another  to  purchase  exchequer 
bills  for  him,  and  giving  him  a  cheque  on  his  hankers  for  the  amount, 
which  the  person  employed  received  in  bank  notes,  and  then  absconded, 

(y)  "To  defraud"  generally  u  sufficient,  14  &  15  Vict.  c.  100,  s.  8. 

(z)  For  form  of  indictment,  &c ,  see  Axchbp.  1  'rim.  Plead,  and  Bvid.  by  Welsby, 

fa)   B.  v.  Bolden,  2  Taunt.  334. 

(6)  Beg  &  P.  582  ;  sec  Beg.  v.  Welch,  2  Den.  C.  C.  78. 

.    V.  Bolden,  2  Taunt.  334. 
1./1  u.  v.  MKcav.  1  Mood.  0.  0. 130.  ft)  B.  v.  Wylie,  1  N.  R.  92. 

(/)  K.  v.  Palmer,  1  N.  R.  9G;  see  Keg.  v.  Lee,  2  M.  \  Koh.  -M. 
[a)  2  Boss.  Cri.  .v  M.  497,  3rd  edit 

(/,)  B.  v.  Crowther,  2  Buss.  Ori.  .v  If.  38G,  3rd  edit. :   Beg.  v.  Thorn.  Car.  A  If. 
Beg.  v.  Gilchrist,  Car.  &  M.  224;  sec  Keg.  v.  Vivian.  1  Den.  0.  0.35;  Keg.  v. 
Carter.  1  Den.  C.  C.  66. 

.    Beg.  \.  Smith,  1  C.  &  K.  703. 

-    ,    38.  Cri.  &  If.  501,  502,  3rd  edit. 


COUNTRY  BANKS,  AND  BANK  NOTES.        307 

cannot  indict  the  offender  for  larceny,  because  the  prosecutor  never  had 
possession,  except  by  the  defendant,  (k) 

If  a  person  gives  forged  country  bank  notes  in  payment  for  goods, 
and,  when  the  seller  objects  to  receive  them,  assures  him  they  are  good, 
knowing  them,  at  the  time,  to  be  valueless,  he  is  indictable  fur  cheating 
and  defrauding  the  seller  out  of  the  goods;  but  the  evidence,  to  show 
the  notes  to  be  bad  and  worthless,  must  be  clear  and  full.  In  a  case 
where  there  was  some  evidence,  to  show  that  the  bank,  of  which  the 
paper  in  question  purported  to  be  the  notes,  had  stopped  seven  years 
previously ;  and  the  notes  appeared  to  have  been  exhibited  under  a  com- 
mission of  bankrupt  against  that  bank ;  the  words,  importing  the  memo- 
randum of  exhibit,  had  been  attempted  to  be  obliterated,  but  the  name, 
of  the  commissioners  remained  on  each  of  them :  it  further  appeared, 
that  the  notes  had  never  been  presented  for  payment  at  the  bank,  or  at 
Sir  J.  Esdaile's,  in  London,  where  they  were  made  payable;  the  judges 
held  the  evidence  insufficient  to  convict  the  prisoner,  as  failing  to  prove 
the  notes  to  be  bad.(?) 

So,  it  is  not  sufficient  to  show  the  bankruptcy  of  two,  out  of  three, 
partners  in  a  bank,  and  the  shutting  up  of  the  bouse ;  for  the  third, 
being  solvent,  the  note,  if  presented  to  him,  may,  perhaps,  be  paid.(m) 
So,  even  where  the  bank  had  ceased  business  twenty  years  before,  and 
the  note,  uttered  *by  the  prisoner,  was  old,  discoloured,  and  p^n 
dated  many  years  before  the  time  of  giving  it,  and  was  regularly  <-  J 
cancelled,  and  withdrawn  from  circulation,  the  makers  having  traced  a 
large  cross  over  the  face  of  it ;  but  the  proceedings  in  bankruptcy,  against 
the  bankers,  were  not  produced ;  the  prisoner,  though  he  gave  a  false 
address,  when  asked,  it  was  considered,  could  not  be  convicted  of  a  false 
pretence,  within  the  statute,  as  there  was  no  evidence  to  go  to  the  jury, 
of  the  prisoner  knowing  the  note  to  be  cancelled,  and  unavailable,  at  the 
time  he  uttered  it.(»)  Neither  is  this  shown,  upon  this  evidence,  to  be 
a  cheat  at  common  law.(w) 

In  these  cases,  the  prisoners,  respectively,  alleged  and  insisted,  that 
the  notes  they  presented,  as  payment,  were  good  notes ;  but  an  actual 
representation  is  not  necessary ;  for  conduct  my  be  equipollent,  without 
words. (o) 

Bank  Post  Bills. — Questions  often  arise  respecting  bank  post  bills,  in 
the  course  of  the  business  of  country  banks ;  we  shall,  therefore,  devote 
a  word  or  two  to  that  subject. 

From  what  has  been  formerly  decided,  it  seems  indisputable,  that 
giving  cash  for  a  bank  post  bill  is  »  a  payment,"  within  the  protection 

(k)  R.  v.  Walsh,  R.  &  Ry.  218.  Stealing  bank  notes  out  of  an  envelope,  Reg. 
v.  Glass,  2  Den.  C.  C.  215.  Larceny  in  cashing  a  cheque,  Reg.  v.  Johnson,  2  Den. 
C.  C.  310.  Larceny  as  to  changing  bank  notes,  R.  v.  Oliver,  4  Taunt.  274  ;  2  Leach, 
1072  ;  see  Reg.  v.  Rodway,  9  Car.  &  P.  984. 

(1)  R.  v.  Flint,  Russ.  &  R.  460. 

(m)  R.  v.  Spenser,  3  Car.  &  P.  420. 

(n)  Reg.  v.  Clark,  2  Russ.  Cri.  &  M.  296,  n. 

\o)  R.  v.  Freeth,  2  Russ.  Cri.  &  M.  295;  R.  v.  Story,  id.  291,  292,  293,  case  of  a 
money  order. 


GRANT  OS  THE  LAW  OF  BANKING. 

of  the  Bankrupt  Act, (_/>')  provided  it  is  really,  and  bona  tide,  made  bo 
the  bankrupt  before  date  of  thcy/w,  or  the  filing  of  a  petition  foradjudi- 
d  of  bankruptcy. 

'I'!i.  refore,  in  ease  a  trader  oommits  an  ad  of  bankruptcy,  and  absconds, 
carrying  with  him  bank  post  hill-,  drawn  in  London,  accepted  />//  tli> 
bank,  and  made  payable  to  himself,  ami  presents  them,  indorsed,  to  the 
Bank  ut'  England,  (when  indorsed  <li'l  not  exactly  appear,)  at  a  Branch 
r*_i^'n  ^;,"k  "'  x^iv  Bank  of  England,  requ<  sting  to  have  gold  ha-  them, 
L  ~"jj  *whirli  i-  given  him,  and  the Jiat  lias  not  then  issued,  ami  the 
act  of  bankruptcy  is  unknown  to  the  manager  ft' the  Branch  Bank,  then 
the  Lrivim_r  change  for  the  hills,  whether  considered  as  a  purchase  of 
them,  or  a  payment,  in  discharge  of  the  liability  of  tin-  hank,  as  acceptors, 
i-  only  valid  if  it  is  protected  as  n  payment  under  the  Bankrupt  Act. 
Where  the  bankrupt  absconded,  from  Liverpool,  March  12;  application 
!■  payment,  was  made  to  the  bank,  in  London,  March  16,  ami  the 
same  was  repeated,  April  8,  and  the  hills  were  changed  at  the  Branch 
Bank,  at  Gloucester,  April  12.  This  was  hell  not  to  he  a  protected  pay- 
ment, as  the  Bank  of  England  had  sufficient  notice. (a\ 

A-  to  proving  the  deeds  of  the  Bank  of  England,  it  was  held,  in  one 
win  re  the  seal  of  the  bank  was  affixed  to  an  indenture,  by  a  piece 
of  paper,  watered  to  the  indenture,  on  which  was  written,  "Sealed,  by 
order  of  the  Court  of  Directors  of  the  Governor  and  Company  of  the 
Bank  of  England,  12th  December,  1833,  J.  Knight,  secretary,"  that 
•  I.  Knight  was  not  an  attesting  witness,  so  as  to  make  it  necessary  to 
call  him.  and  that  the  execution  might  he  proved  by  the  seaL(r) 

Remittances. — As  regards  questions  respecting  the  transmission  of 
money  by  the  intervention  of  hankers,  from  one  part  of  England  to 
another,  many  points  have  been  noticed,  arising  in  cases  which  have 
referred  to  principally  for  other  purposes,  ami  will  be  found  in  parts 
of  the  work,  where  discounts,  commission,  and  the  relations  between 
banks  in  one  town,  and  their  branches,  or  correspondents  in  London,  or 
elsewh<  re,  are  stated. 

Foreign. — With  respect  to  the  transmission  of  money,  between  Eng- 
r*-T'-n  ^:""'  :""'  f,ir(A-n  countries,  some  decisions  have  *bcen  made. 
L  '  J  which  it  may  he  desirable  to  bring  separately  before  the  reader's 
notice,  especially  as  regards  the  Bubject  of  the  course  of  exchange.  If 
A.,  in  Paris,  deposits  money  in  tin'  banking  house  of  B.  there,  for 
which  I!,  gives  him  his  promissory  note,  allowing  three  percent,  interest, 
ami  made  fi  payable  in  Paris,  or  at  the  choice  of  the  bearer,  at  the  (Jnion 
Bank,  at  Dover,  or  at  my  usual  residence  in  London,  aocording  to  the 
course  of  exchange  upon  Paris."  I!.,  previous  to  the  first  French  Revolu- 
tion, ami  for  Borne  time  subsequently  to  its  outbreak,  kept  a  banking 

(/.')  12  A  13Vict.c.  t;  Willis  v.   Bank  of  England,   f  A.  $  E.  21. 

Form  of  bank  post  bill,  id.  -'-',  a.     Entry  in  bank  books  of  application  to  stop  pay- 
ment, i'l.  'J'J. 

(Villi    -..  l:. oik  of  England,  i  A.  ,v  E.  21.     Hank  post  bills,  issued  in  Lon- 
:  payable  at  the  branch  l>anka  in  the  country,  L  e.,  the  bank  is  not 
i  them  there,  8.  <'..  i'l.  38. 
Doe  d.  Bank  of  England  v.  Chambers,  i  A.  a:  E. 


COUNTRY  BANKS,  AND  BANK  NOTES.       ;,,  i 

house  in  Paris,  into  which  travellers,  at  that  time,  were  accustomed  to 
pay  money,  which  they  wished  to  be  transmitted  home,  and  took  pro- 
missory notes  similar  in  form  to  this.  At  the  time  when  the  note  in 
question  was  delivered  to  A.,  viz.,  20th  May,  1791,  there  was  a  direct 
course  of  exchange  between  London  and  Paris.  In  October,  170;;,  the 
exchange  between  London  and  Paris  ceased  altogether.  On  20th  May, 
1799,  when  the  note  was  presented  for  payment  in  London,  there  was 
no  direct  course  of  exchange  between  them,  but  there  was,  and  continued 
to  be  at  the  time  of  the  bringing  of  the  under-mentioned  action  by  A., 
a  circuitous  (though  the  shortest  available)  course  of  exchange  between 
London  and  Paris,  through  Hamburgh,  and  A.  sued  on  the  note,  to 
recover  from  B.  the  value  of  the  money  he  had  paid,  in  Paris,  according 
to  this  circuitous  course  of  exchange,  together  with  interest,  and  the 
question  was,  whether  he  was  entitled  to  this  value,  or  the  value  that 
it  would  have  been  of,  according  to  the  rate  of  the  latest  direct  course 
of  exchange,  being  5dl.  3s.  4d.  in  one  case,  and  1SL  lGs.  Qd.  in  the 
other,  and  it  decided  that  he  was  entitled  to  the  former  sum,  notwith- 
standing that  neither  of  the  parties  at  the  time  of  making  the  contract 
contemplated  the  interruption  in  the  exchanges,  which  the  war  pro- 
duced, (s) 

No  objection  was  made  in  this  case,  nor  in  several  others,  r*_.o--i 
*which  have  subsequently  occurred,  that  the  statute  of  Anne,  L 
which  gave  to  promissory  notes  a  negotiable  character,  &c,  does  not 
extend  to  notes  made  out  of  England ;(t\  and,  in  an  action  by  a  joint 
stock  banking  company,  on  a  promissory  note  made  by  one  L.,  in  Scot- 
land, against  the  indorser  to  them,  it  was  considered  as  an  inland  bill  of 
exchangej  of  which,  therefore,  protest  for  payment  was  not  necessary, 
and  the  company  recovered,  although  it  was  not  shown  that  they  had 
duly  delivered  at  the  stamp-office,  the  return  required  by  statute  7  Geo. 
IV.  c.  67.(u) 

A.,  in  London,  draws  a  bill  on  B.,  in  Paris,  which,  having  been  nego- 
tiated through  Amsterdam,  is  presented  for  acceptance  to  B.,  who  re- 
fuses to  accept,  but  promises  that  the  bill  shall  be  paid  at  maturity. 
Before,  however,  the  bill  is  due,  the  French  Government  prohibits  the 
payment  of  any  bills  drawn  in  countries  at  war  with  France,  which  Great 
Britain  was,  and  on  that,  the  bill  was  not  paid  by  B.  Under  these  cir- 
cumstances, A.  is  liable  to  the  payees,  not  merely  for  the  whole  value, 
that  he  originally  received  for  the  bills,  with  interest,  and  the  expenses 
of  protecting,  but  for  the  amount  of  the  re-exchange,  by  the  circuitous 
course  of  Amsterdam,  that  being  a  consequence  of  the  bill  not  being 
paid.(aA 

(s)  Pollard  v.  Hemes,  3  B.  k  P.  335.  As  to  legality  of  promissory  notes  made 
abroad,  see  Chitt.  Bills,  327,  6th  edit. 

(I)  3  &  4  Anne,  c.  9.  See  Hewett  v.  Morris,  3  Campb.  303,  case  of  a  promissory 
note  made  in  Paris ;  Roche  v.  Campbell,  3  Campb.  247,  note  made  in  Ireland ; 
Splitgerber  v.  Kolm,  1  Stark.  125,  note  made  in  Prussia;  Carr  v.  Shaw,  Bayl. 
Bills,  18,  n.  (1)  ;  Chitt.  Bills,  32V,  6th  edit.,  note  made  at  Philadelphia. 

(w)  Bonar  v.  Mitchell,  5  Exch.  415.  39  Geo.  III.  c.  107,  and  12  Geo.  III.  c.  72. 
appear  to  recognize  promissory  notes  made  in  Scotland.  As  to  presentment  of 
promissory  note  made  in  Belgium,  see  Vanderdonckt  v.  Thellusson,  8  C.  B.  812. 

(z)  Mellish  v.  Simeon,  2  H.  Bla.  378;  and  see  De  Tastet  v.  Baring,  11  East, 
265. 


liRAXT    ON    THE    LAW    OF    BANKING. 

I  •'  ,  bill  of  exchange  be  drawn  in  England,  on  and  aeoepted  by  a  firm, 
carrying  on  business  in  Paris,  payable  al  Paris,  to  A.,  who  indore 
bankers  in   London,  it  maybe  asked,  is  this  a  foreign  lull ;  and  when 
dishonoured  by  the  acceptors  in   Paris,  and  protest  and  notice  of  dis- 

.    ...  . .  li nr.  sufficient,  ^according  to  French  law,  has  been  given,  is 

L      '  -1  this  enough  to  charge  A.  in  an  action  in  England,  by  the  bankers, 
although  Buch  protest,  and  notice  of  dishonour,  were  insufficient,  accord- 
ing to  English  law.     The  Court  of  Queen's  Bench  has  hold,  that  it  ii 
but  this  decision  has  not  been  approved. 
Home. — An  agent  of  a  Durham  Bank,  residing  at  Hexham,  receives 

from  a  person  also  residing  there,  to  be  transmitted  to  London;  for 

this  purpose,  he  tills  up,  and  signs  a  printed  form  of  bill,  requiring  the 

firm  in   London,  (both  houses  consisting  of  the  Bame  partners,)  to  pay 

t  forty  days  afterdate;  the  agent  was  known  to  the  other,  to  be 

gent  of  the  Durham  Bank,  and  to  draw  the  bill,  as  agent,  and  on 
account  of  the  Durham  Hank,  and  in  the  body  of  the  bill,  the  London 
houses  were  desired  to  place  the  Bum  "to  the  account  of  the  Durham 
Hank."  The  bill,  when  due,  was  presented  in  London,  but  refused  pay- 
ment :  and  when  the  depositor  sued  the  agent,  he  was  held  to  be  perso- 
nally responsible,  on  the  universal  rule,  that  whoever  puts  his  name  to 
a  bill  of  exchange,  thereby  makes  himself  personally  liable,  unless  he 
Btates,  mi  the  face  of  the  bill,  that  he  subscribes  for  another,  or  by  pro- 
curation  of  another:  the  agent,  therefore,  was  liable,  notwithstanding 
the  depositor's  knowledge,  that  he  was  a  mere  agent:  and  whether,  or 
not,  the   Durham   Hank  was  liable,  made  no  difference,  as  regards  the 

t's  liability 
Where  a  debtor  remit-  to  his  creditor,  a  bank  note,  or  bill  of  exchange, 

mode  of  conveyance  directed  by  the  creditor  ;  or,  if  he  transmits  by 
the  post,  as  being  the  usual  mode  of  transmission,  in  the  absence  of 

.  orders  from  the  *creditor,  prescribing  the  mode,  and  the  bill,  or 
I-         J  note,  be  lost,  or  stolen,  the  loss  falls  upon  the  crcditor.(«) 

A  parcel  made  up  by  a  banking  house,  sealed,  and  addressed  to  another 
banking  house,  containing  cash,  notes,  and  cheques  of  the  latter,  and 
bills  of  exchange,  specially  indorsed  to  the  former,  to  make  up  a  balance, 
due  from  them,  on  their  general  account,  and  deposited  on  the  3rd  of 

duly,  after  the  hank  was  shut,  with  a  woman  servant,  left  in  care  of  the 

banking  house,  to  be  given  to  the  postman,  in  the  morning  of  the  4th, 
who  w;i-  in  the  habit  ot  calling  for  such  parcels,  before  banking  hours. 
Held  to  be  seizable,  under  an  extent  in  aid,  tested  on  the  2nd  July,  and 
returnable  on  the  6tb  November,  on  Bpecial  demurrer,  to  a  plea,  statin- 
fact-,  and  tendering  issue  on  the  property;  and  that,  although  the 
inquisition,  finding  the  debt  due  to  the  debtor  of  the  crown  debtor,  was 
not  taken  till  the  Ith  November  following,  because  such  circumstances 
I  amount  to  a  delivery  of  the  parcel,  to  the  persons  to  whom  it  was 

Rothschild  t.  Carrie,   l  Q.  B.  43;  lee  Story  on  Bills  of  Exchange,  p.  352; 

Kemble,  8  Moo.  P.  0.  323;  and  lee  2  Rosa.  CM.  &  M.  v.u. 
Li    Ibitter  v.  Farrow,  6  Man.  A  Dwerby  v.  Butcher.  2  Cro.  &  M. 

Q     pj  \.  Harden,  7  Taunt.  L60. 

So     ■     Pi 


COUNTRY  BANKS,  AND  BANK  NOTES.       311 

addressed,  or  their  agent,  and  therefore  confers  no  right  of  property ; 
otherwise,  if  it  had  been  delivered  to  the  postman. 

The  contents  of  such  a  parcel,  while  remaining  in  the  banking  house, 
under  such  circumstances,  remain  there,  at  the  risk  of  the  bankers  who 
made  it  up,  and  it  is  still  subject  to  their  control ;  for,  a  writ  of  extent 
binds  from  the  test,  and  such  property  as  bills  of  exchange  is  bound, 
while  in  the  custody  of  the  debtor,  (b) 

London  Agent. — Some  country  bankers  pay  the  London  banker,  who 
acts  as  their  agent  and  correspondent,  a  fixed  annual  sum,  for  conduct- 
ing their  agency  business.  Others  allow  a  commission  on  the  amount  of 
the  transactions  during  the  year.  There  are  many  country  bankers  who 
pay  no  commission,  but  leave  a  sum  of  money  in  the  hands  of  their  Lon- 
don agents,  in  the  nature  of  a  deposit,  against  *which  they  are  r*_ioQ-i 
not  permitted  to  draw.  In  such  cases,  the  sum,  which  is  said  L  '  -I 
to  vary  from  4,000?.  to  30,000?.,  is  altogether  withdrawn  from  the  gene- 
ral account  of  the  country  banker,  and  placed  to  another,  called  the  de- 
posit account. 

On  all  stock,  in  the  public  or  other  funds,  purchased  or  sold  by  the 
banker  for  his  customer,  he  is  allowed  one-half  the  commission  charged 
by  the  broker,  (c) 

Limitations. — A  question  of  importance  respecting  tlie  operation  of 
the  Statute  of  Limitations,  on  the  relations  between  country  bankers  and 
their  town  correspondents. 

A.  and  B.  were  bankers,  at  Norwich,  for  whom  C.  &  Co.,  their  Lon- 
don correspondents,  had  accepted  bills,  between  the  years  1784  and  1806, 
to  the  amount  of  nearly  900?.,  which,  however,  bad  neither  been  taken 
up,  nor  presented  for  payment.  A.  dies  in  1808,  and  shortly  after  his 
death,  a  commission  of  bankruptcy  issues  against  B.  At  that  time  there 
was  a  considerable  balance  belonging  to  B.  in  the  hands  of  C.  &  Co., 
and  this  they  paid  over  to  the  assignees  of  B.,  less  a  sum  equal  to  the 
amount  of  the  bills  they  had  accepted,  as  above. 

The  bills  being  outstanding  then,  was  considered  to  be  no  ground  for 
presuming  that  they  had  been  satisfied,  notwithstanding  the  length  of 
time  which  had  elapsed ;  and  the  London  bankers  were  considered  to  be 
entitled  to  retain,  until  either  the  bills  were  accounted  for,  or  they  them- 
selves were  indemnified. (c?) 

Issue  of  Bank  Notes. — The  regulations  under  which  bankers  are 
allowed  to  issue  their  promissory  notes,  &c,  are  contained,  among  other 
matters,  in  a  statute  which  enacts  as  follows : — (e) 

"  That  from  and  after  the  first  day  of  July,  1828,  it  shall  be  lawful 
for  any  person  or  persons,  carrying  on  the  business  of  a  banker  p^og-i 
or  *bankers  in  England,  (except  within  the  city  of  London,  or  L  J 
within  three  miles  thereof,)  having  first  duly  obtained  a  license  for  that 
purpose,  and  given  security,  by  bond,  in  manner  hereinafter  mentioned, 
to  issue,  on  unstamped  paper,  promissory  notes,  for  any  sum  of  money 

(b)  Rex  v.  Lambton,  5  Price  ,428. 

(c)  Lawson's  Hist,  of  Banking,  257.  (d)  Morse  v.  Williams,  3  Camp.  418. 
(«)  9  Geo.  IV.  c.  23,  s.  1. 


312         GRANT  OX  THE  LAW  OF  BANKING. 

mting  t..  five  pounds  or  upwards,  expressed  to  be  payable  to  the 
r,  ..a  demand,  or  to  order,  at  any  period,  not  exceed] 
after  sight :  and  also  to  draw  and  issue,  on  unstamped  paper,  bills  of  ex- 
ohang  »ed  payable  to  order,  on  demand,  or  at  any  pi 

not  exceeding  Beven  days  after  Bight,  or  twenty-one  days  after  the  date 
thereof:  provided  Buoh  bills  of  exohangebe  drawn  upon  a  person  or  per- 
sons carrying  on  the  business  of  a  banker  or  bankers,  in  London,  West* 
minster,  or  the  borough  of  Southwark;  or,  provided,  such  bills  of  ex- 
change be  drawn  by  any  banker  or  banker.-,  at  a  town  or  place,  wbere  he 
or  they  shall  be  duly  licensed  to  issue  unstamped  notes  and  bills,  under 
the  authority  of  this  act,  upon  himself  or  themselves,  or  his  or  their  co- 
partner, or  copartners,  payable  at  any  other  town  or  place,  where  such 
banker  or  bankers  shall  also  be  duly  licensed  to  issue  such  notes  and  bills 
a.-  aforesaid." 

A  subsequent  Btatute,  usually  known  as  the  Bank  Charter  Act,  of 
1VH,  limits  the  power  of  issuing,  by  the  following  enactments: — 

"  That( f\  from  and  after  l'.lth  July,  1*44,  no  person,  other  than  a 
banker,  who,  on  6th  May,  1S44,  was  lawfully  issuing  his  own  bank  notes, 
.-hall  make  or  issue  bank  notes,  in  any  part  of  the  United  Kingdom. 

«  That)  -/)  from  and  after  19th  July,  1844,  it  shall  not  be  lawful  for  any 
banker  to  draw,  accept,  make  or  issue,  in  England  or  Wales,  any  bill  of 
exchange,  or  promissory  note,  or  engagement  for  the  payment  of  money, 
payable  to  bearer  on  demand,  or  to  borrow,  owe,  or  take  "/',(/<)  in  Eng- 
r*ll(\l  k"1'^  ul  ^  :l'es>  any  sums  or  sum  of  money  on  the  bills  *or  notes 
L  '  J  of  Such  banker,  payable  to  bearer  on  demand,  save  and  except 
that  it  shall  be  lawful  for  any  banker,  who  was  on  the  6th  day  of  May, 
l^i  \.  carrying  on  the  business  of  a  banker  in  England  or  Wales,  and 
Was   then   lawfully  issuing,   in   England  or  Wales,    his  owu   bank    i 

(/)  7  .v  s  Vi,t.  c.  32,  s.  10.     Section  28  defines  various  terms  as   follows  (the 
having  regulated  the  mode  of  transacting  the  business  of  the 
Bank  of  England) : — The  term,  "  bank  notes,"  used  in  this  act  shall  extend  add 
apply  to  all  hills  or  notes  for  the  payment  of  money  to  the  bearer  on  demand  Other 
than  hills  or  notes  of  the  governor  and  company  of  the  Bank  of  England;  the 
Bank  of  England  notes"  shall  extend  ami  apply  to  the  promissory  notes  of 
the  Governoraml  Company  of  the  Hank  of  England,  payable  to  bearer  on  demand  ; 
the  term  "banker"  shall  extend  ami  apply  to  all  corporations,  societies,  partner- 
ships ami  personal  and  every  individual  person  carrying  on  the  business  of  bank- 
aether  by  the  issue  of  hank  notes  or  otherwise,  except  only  the  Governor  and 
•  B  ink  of  England. 

fvi  7  k  B  Vict.  c.  32,  s.  11. 

Tin-  acceptance  by  a  hank  of  a  hill  drawn  by  a  customer  on  account  of  mo- 

■  the  latter  in  hands  of  former,  i-  a  borrowing  within  these  words,  though  it 
he  payable  at  a  distant  day.     Hank  of  England  v.  Anderson,  ::  Bing.  X.  C 
Where  a  London  joinl  Btock  ''auk.  consisting  of  nunc  than  sis  persons,  agreed  with 

•dian  bank  that  <;.  P.,  the  manager  of  the  London  hank,  (but  not  a  partner 
therein,)  Bhould  accept  hills  drawn  by  the  Canadian  hank,  payable  al  a  date  earlier 

tonths,  and  the  London  joint  stuck  bank  should  provide  funds  for  mcct- 

■  'u  :    the  acceptance  of  SUCb  hill-'  was    held  to  lie  unlawful  within  the  above 

Booth  v.  Lank  of  England,  •;  Bing.  \.  «'.  ii:.  :  s.  <'..  2  Kei  d,  166;  in 

bom.  1'roc.  :  Ola.  .v.  I'.  509.     Since  L9th  July,  L844,  any  partnership  in  hankers. 

h  exceeding  -i.\  in  number,  carrying  on  business  in  London,  or  within  sixty- 

ftre  miles  thereof,  may  draw,  accept  or  indorse  bills  of  exchange,  not  being  payable 

■  n  demand,  anything,  fcc,  notwitbstandii         I  i  -  Vict.  c.  32,  b.  26;  and 

'.   1  Will.  IV.  c.  'J8,  s.  3;  Perring  v.  Dun-ion,  By.  &  My.  426. 


COUNTRY    BANKS,    AND    BANK    NOTES.  313 

under  the  authority  of  a  license  to  that  effect,  to  continue  to  issue  such 
notes  to  the  extent,  and  under  the  conditions  hereinafter  mentioned,  but 
not  further'  or  otherwise ;  and  the  right  of  any  company  or  partnership 
to  continue  to  issue  such  notes,  shall  not  be  in  any  manner  prejudiced  or 
affected  by  any  change  which  may  hereafter  take  place  in  the  personal 
composition  of  such  company  or  partnership,  either  by  the  transfer  of 
any  shares  or  share  therein,  or  by  the  admission  of  any  new  partner  or 
member  thereto,  or  by  the  retirement  of  any  present  partner,  or  member 
therefrom :  provided  always,  that  it  shall  not  be  lawful  for  any  company 
or  copartnership,  now  consisting  of  only  six  or  less  than  six  persons,  to 
issue  bank  notes  at  any  time,  after  the  number  of  partners  therein  shall 
exceed  six  in  the  whole. " 

A  banker,  who  once  becomes  bankrupt,  or  ceases  to  issue  his  own 
notes,  is  thus  strictly  prohibited  from  recommencing  the  issue ;  if  once 
he  withdraws  from  business,  or  his  notes  from  circulation,  he  can  never 
send  them  out  again  ;  as  follows : — 

"  Be  it  enacted,  (*')  that  if  any  banker  in  any  part  of  the  United  King- 
dom, who,  after  19th  July,  1844,  shall  be  entitled  to  issue  bank  notes, 
shall  become  bankrupt,  or  shall  cease  to  carry  on  the  business  of  a 
banker,  or  shall  discontinue  the  issue  of  bank  notes,  either  by  agree- 
ment with  the  Governor  and  Company,  of  the  Bank  of  England  or  other- 
wise, it  shall  not  be  lawful  for  such  banker  at  any  time  thereafter  to  issue 
any  such  notes." 

Returns  of  Circulation. — Then,  the  existing  banks  of  *issue,  p^y^-i 
are  allowed  to  continue  as  banks  of  issue,  under  the  restrictions,  L  J 
as  to  returns  and  other  matters,  as  follows  :• — 

"And  be  it  enacted,(&)  that  every  banker  claiming  under  this  act  to 
continue  to  issue  bank  notes  in  England  or  Wales,  shall,  within  one 
month  next  after  19th  July,  1844,  give  notice  in  writing  to  the  com- 
missioners of  stamps  and  taxes,  at  their  head  office  in  London,  of  such 
claim,  and  of  the  place  and  name  and  firm,  at  and  under  which  such 
banker  has  issued  such  notes  during  the  twelve  weeks  next  preceding 
the  27th  April,  1844 ;  and  thereupon  the  said  commissioners  shall  ascer- 
tain if  such  banker  was,  on  6th  May,  1844,  carrying  on  the  business  of 
a  banker,  and  lawfully  issuing  his  own  bank  notes  in  England  or  Wales, 
and  if  it  shall  so  appear,  then  the  said  commissioners  shall  proceed  to 
ascertain  the  average  amount  of  the  bank  notes  of  such  banker,  which 
were  in  circulation  during  the  said  period  of  twelve  weeks  preceding 
27th  April,  1844,  according  to  the  returns  made  by  such  banker,  in 
pursuance  of  the  stat.  4  &  5  Vict.  c.  50  j  and  the  said  commissioners, 
or  any  two  of  them,  shall  certify,  under  their  hands  to  such  banker,  the 
said  average  amount,  when  so  ascertained  as  aforesaid ;  and  it  shall  be 
lawful  for  every  such  banker  to  continue  to  issue  his  own  bank  notes 
after  19th  July,  1844  :  provided  nevertheless,  that  such  banker  shall 
not  at  any  time  after  10th  of  October,  1844,  have  in  circulation,  upon 
the  average  of  a  period  of  four  weeks,  to  be  ascertained  as  hereinafter 
mentioned,  a  greater  amount  of  notes  than  the  amount  so  certified." (I) 

(i)  1  &  8  Vict.  c.  32,  s.  12.  (*)  1  &  8  Vict.  c.  32,  s.  13. 

(I)  See  further  ss.  14  and  15,  as  to  evidence  of  amount  of  notes  in  circulation, 
s.  15- 


CHANT  OB  THE  LAW  OF  BANKING. 

II'   My  Returns. — The  regulations  of  the  returns  of  bank  Dotea  in 
circulation,  other  than  those  of  the  Bank  of  England,  prescribed  by  the 

•  •  just  mentioned,  under  a  penalty  of  50?.,  arc  as  follows  : — 
"Be  it  enaoted,(m)  that  from  and  after  the  1st  July,  1841,  all  cor- 
porations and  copartnerships,  carrying  on  banking  business  under  the 
provisions  of  the  Bald  act  of  7  Goo.  1,  c.  46,  and  all  other  persons  car- 
rying on  banking  business  in  England  and  Wales,  and  making  and 
issuing  promissory  notes,  payable  to  bearer  on  demand,  and  all  corpora- 
tions, copartnerships,  and  persons  carrying  "ii  such  business,  and  making 
and  issuing  such  promissory  notes  as  aforesaid  in  Scotland,  and  also  the 

rnor  and  Company  of  the  Bank  of  Ireland,  and  all  corporations, 

tnerships,  and  persons  carrying  on  such  business,  and  making  and 
issuing  such   promissory  notes  as  aforesaid,   in  Ireland,   shall  severally 

just  and  true  accounts  of  the  amount  of  notes  in  circulation  at  the 
r*-U.->n  tdose  °f  the  business  in  each  week,  and  shall,  at  the  *eud  of 
L  -I  every  four  weeks,  make  up  from  Buch  weekly  accounts,  a  just 
and  true  account  of  the  average  amount  of  such  notes  in  circulation 
during  such  four  weeks  ;  and  shall  also,  within  seven  day-  after  the  con- 
clusion of  such  four  weeks,  return  and  deliver  such  last-mentioned 
account  for  the  four  weeks  immediately  preceding,  and  so  on  every 
successive  four  week-,  such  accounts  being  always  verified  in  the  manner 
hereinafter  directed,  to  the  commissioners  of  stamps  and  taxes,  at  their 
head  office  in  Westminster,  upon  pain  that  any  corporation,  company, 
copartnership,  or  persons  or  person,  who  shall  neglect  or  omit  to  keep, 
or  to  return  and  deliver,  any  such  account  in  the  manner  directed  by 
this  act,  shall,  lor  every  such  neglect  or  omission,  forfeit  the  sum  of 
fifty  pounds,  to  be  recovered,  with  full  costs  of  suit,  in  the  name  of  her 
majesty's  attorney  or  Bolicitor-general  in  England  or  Ireland,  or  of  her 
majesty's  advocate-general  in  Scotland. 

••  Audi//)  be  it  enacted,  that  every  such  account  so  to  be  returned 
and  delivered  to  the  commissioners  of  stamps  and  taxes  as  aforesaid, 
shall  be  verified  by  the  affidavit  or  affirmation  of  the  secretary,  accountant, 
cashier,  or  other  chief  clerk  or  officer  of  the  corporation,  company,  or 
copartnership,  or  persons  or  person,  so  carrying  on  banking  business, 
and  making  such  return  ;  and  Buch  affidavit  or  affirmation  shall  be  made 
before  any  justice  of  the  peace  in  any  part  of  the  United  Kingdom,  or 
before  a  master  extraordinary  in  Chancery,  or  any  person  authorized  to 

affidavits  by  any  of  the  superior  Courts  in  England  or  Inland:  and 
no  such  affidavit  or  affirmation  shall  be  liable  to  any  stamp  duty. 

■  knd/o)  be  it  enacted, that  from  the  accounts  which  shall  be  rendered 
by  the  Governor  and  Company  of  the  Bank  of  England,  in  pursuance  of 
the  act  in  that  behalf,  and  also  from  the  accounts  which  >hall  be  rendered 
in   pursuance  of  this  act,  there  shall  be  made  up  an  account  of  the 

amount  of  pr issory   notes    payable  to  bearer  on 

demand,  which  have  been  in  circulation  in  the  United  Kingdom  during 
tic  preceding  four  weeks,  and  bo  on  every  successive  four  weeks,  dis- 

(m)  4  &  r,  \  .  s.  i. 

{'<)  4  k  :,  \  (o)  Id.  s.  3. 


COUNTRY  BANKS,  AND  BANK  NOTES.        315 

tinguishing  those  circulated  by  the  Bank  of  England,  by  private  banks, 
and  by  joint  stock  banks  in  England  and  Wales,  by  the  banks  in  Scot- 
land, by  the  Bank  of  Ireland,  and  by  all  other  banks  in  Ireland,  and  of 
the  average  amount  of  the  bullion  in  the  Bank  of  England,  during  the 
preceding  four  weeks ;  and  such  account  shall  be  published  in  the  Lon- 
.don  Gazette,  in  every  four  weeks,  as  soon  as  the  same  can  conveniently 
be  prepared  for  that  purpose." 

Monthly  Averages. — Any  excess,  above  the  limited  monthly  average 
circulation,  is  prohibited,  as  follows  : — 

"  And(/>)  be  it  enacted,  that  if  the  monthly  average  circulation  of  bank 
notes  of  any  banker,  taken  in  the  manner  hereinafter  directed,  (j)  r*i  j.qi 
*shall  at  any  time  exceed  the  amount  which  such  banker  is  •-  J 
authorized  to  issue,  and  to  have  in  circulation  under  the  provisions  of 
this  act,  such  banker  shall  in  every  such  case,  forfeit  a  sum  equal  to  the 
amount  by  which  the  average  monthly  circulation,  taken  as  aforesaid, 
shall  have  exceeded  the  amount  which  such  banker  was  authorized  to 
issue,  and  to  have  in  circulation  as  aforesaid." 

A  further  provision,  for  the  render  of  accounts,  thus  enacts  : — 

"  And(r)  be  it  enacted,  that  every  banker  in  England  and  Wales,  who, 
after  10th  October,  1844,  shall  issue  bank  notes,  shall,  on  some  one  day 
in  every  week  after  19th  October,  1844,  (such  day  to  be  fixed  by  the 
Commissioners  of  Stamps  and  Taxes,)  transmit  to  the  said  commissioners 
an  account  of  the  amount  of  the  bank  notes  of  such  banker  in  circulation 
on  every  day  during  the  week  ending  on  the  next  preceding  Saturday, 
and  also  an  account  of  the  average  amount  of  the  bank  notes  of  such 
banker  in  circulation  during  the  same  week ;  and  on  completing  the  first 
period  of  four  weeks,  and  so  on  completing  each  successive  period  of  four 
weeks,  every  such  banker  shall  annex  to  such  account  the  average  amount 
of  bank  notes  of  such  banker  in  circulation  during  the  said  four  weeks, 
and  also  the  amount  of  such  bank  notes  which  such  banker  is  authorized 
to  issue  under  the  provisions  of  this  act ;  and  every  such  account  shall 
be  verified  by  the  signature  of  such  banker,  or  his  chief  cashier,  or  in  the 
case  of  a  company  or  partnership,  by  the  signature  of  a  managing  direc- 
tor, or  partner,  or  chief  cashier,  of  such  company  or  partnership,  and 
shall  be  made  in  the  form  to  this  act  annexed,  marked  ;(B.)  and  so  much 
of  the  said  return  as  states  the  weekly  average  amount  of  the  notes  of 
such  bank,  shall  be  published  by  the  said  commissioners  in  the  next 
succeeding  «  London  Gazette,"  in  which  the  same  may  be  conveniently 
inserted ;  and  if  any  such  banker  shall  neglect,  or  refuse  to  render  any 
such  account,  in  the  form  and  at  the  time  required  by  this  act,  or  shall 
at  any  time  render  a  false  account,  in  the  form  and  at  the  time  required 
by  this  act,  or  shall  at  any  time  render  a  false  account,  such  banker  shall 
forfeit  the  sum  of  one  hundred  pounds  for  every  such  offence." 
The  monthly  average  is  to  be  ascertained,  thus : — 
"  And(s)  be  it  enacted,  that  for  the  purpose  of  ascertaining  the  monthly 
average  amount  of  bank  notes  of  each  banker  in  circulation,  the  aggre- 

(p)  7  &  8  Vict.  c.  32,  s.  17. 

(q)  See  7  &  8  Vict.  c.  32,  s.  19,  inf.,  p.  443. 

(r)  7  &  8  Vict.  c.  32,  s.  18.  (*)  Id-  s.  19. 


310        GRANT  ON  THE  LAW  OF  BANKING. 

gate  of  the  amount  of  bank  notes  of  each  such  banker  in  circulation  on 
day  of  business  during  the  first  oomph  te  period  of  four  weeks  next 
after  10th  October,  1844,  such  period  ending  on  a  Saturday,  shall  be 
divided  by  the  number  of  days  of  business  in  such  four  weeks;  and  the 
average  so  ascertained  BhaU  be  deemed  bo  be  the  average  of  bank  notes 
of  each  B»oh  banker  in  circulation  during  such  period  of  four  weeks,  and 
r*J_in  so  Ul  v'u^x  roooeB8frfl  period  of  four  weeks  *and  such  average  is 
L  J  not  tu  exceed  the  amount  certified  by  the  Commissioners  of 
Stamps  and  Taxes  as  aforesaid." 

Then  the  commissioners  (now  1 1 1 « -  Board  of  Inland  Revenue)  were  em- 
d.  (l>ut  only  with  the  consent  of  the  Lords  of  the  Treasury,)  to 
examine,  copy,  &c.,  the  books  of  all  hanks  of  issue,  containing  accounts 
of  the  notes  in  circulation,  to  insure  the  rendering  true  accounts. (i) 

Return  of  Names,  disc. — Then  follows  a  very  material  enactment,  pre- 
BCribing  annual  returns  of  names  of  partners,  &C.,  in  all  banking  estab- 
lishments  whatever;  thus: — 

"  And(//)  be  it  enacted,  that  every  banker  in  England  and  Wales,  who 
is  now  carrying  on,  or  shall  hereafter  carry  on  business  as  such,  shall, 
on  the  first  day  of  January  in  each  year,  or  within  fifteen  days  thereafter, 
make  a  return  to  the  commissioners  of  stamps  and  taxes,  at  their  head 
office  in  London,  of  his  name,  residence,  and  occupation,  or,  in  the  ease 
of  a  company  or  partnership,  of  the  names,  residence,  and  occupation  of 
every  person  composing,  or  being  a  member  of  such  company  or  partner- 
ship, and  also  the  name  of  the  firm  under  which  such  banker,  company, 
or  partnership,  carry  on  the  business  of  banking,  and  of  everyplace 
where  such  business  is  carried  on. 

>•  Penalty. — Ami  if  any  such  banking  company,  or  partnership,  shall 
omit  or  refuse  to  make  such  return  within  fifteen  days  alter  the  said  first 
day  of  January,  or  shall  wilfully  make  other  than  a  true  return  of  the 
persons  as  herein  required,  every  hanker,  company,  or  partnership,  so 
offending,  shall  forfeit  and  pay  the  sum  of  fifty  pounds;  and  the  .-aid 
commissioners  of  stamps  and  taxes  shall,  on  or  before  the  first  day  of 
March  in  every  year,  publish  in  some  newspaper  circulating  within  each 
town  or  county  respectively,  a  copy  of  the  return  so  made  by  every  hanker, 
company,  or  partnership,  carrying  on  the  business  of  bankers  within  such 
town  or  county  respectively,  as  the  case  may  be." 

Quart*  rly  Returns, — Besides  the  above  regulations,  however,  the  ob- 

ii  to  n  ndex  quarterly  returns,  together  with  other  regulations,  had 

bei  n  already,  by  a  previous  statute,  imposed   upon  hankers  issuing  their 

own  notes ;  enacting  thus  : — 

"  That(./j  all  corporations  and  copartnerships  carrying  on  banking 
r*J4rl  ™8meM  nuder  7  Geo.  IV.  e.  46,  and  all  other  persons  carrying 
L  J  on  ^banking  business,  ami  making  and  issuing  promissory  notes 
payable  to  hearer  on  demand,  .-hall  respectively  keep  weekly  accounts 
from  the  28th  of  August,  1  v;.'l.  of  the  average  amount  of  notes  in  circu- 
lation at  the  end  of  each  week  of  the  corporation,  copartnership,  or  per- 

(0  7  &  8  Vict.  c.  32,  s.  20.  (u)  Id.  s.  21. 

(z)  3  A:  4  Will.  IV.  c.  83,  s.  1. 


COUNTRY    BANKS,    AND    BANK    NOTES.  317 

sons  or  person  so  carrying  on  banking  business  and  keeping  such  weekly 
account ;  and  shall,  within  one  month  after  the  thirty-first  day  of  De- 
cember, after  the  28th  day  of  August,  1833,  make  up  from  such  weekly 
account  an  average  account  of  the  amount  of  such  notes  in  circulation 
during  the  period  between  the  28th  of  August,  1833,  and  the  making  up 
such  account ;  and  shall  also  make  up  a  like  account  at  the  end  of  each 
quarter,  ending  on  the  first  day  of  April,  the  first  day  of  July,  the  first 
day  of  October,  and  the  first  day  of  January,  in  the  year  1834,  and  every 
subsequent  year,  of  the  average  amount  of  notes  in  circulation  in  the  pre- 
ceding quarter,  and  shall  return  and  deliver  such  account  to  the  commis- 
sioners of  stamps,  at  the  stamp  office  in  London ;  and  such  accounts  and 
returns  shall  be  verified  upon  the  oath  of  the  secretary  or  accountant,  or 
some  officer  of  the  corporation,  company  or  copartnership  or  persons  so 
carrying  on  banking  business,  and  making  such  return,  which  oath  shall 
be  taken  before  any  justice  of  the  peace,  and  which  oath  any  justice  of 
the  peace  is  hereby  authorized  to  administer. 

"  Penalty. — And  if  any  corporation,  company  or  copartnership,  or 
persons  or  person  so  carrying  on  banking  business,  shall  neglect  to  keep 
such  weekly  accounts,  or  to  make  out  or  to  return  or  deliver  such  aver- 
ages to  the  commissioners  of  stamps,  at  the  stamp  office  in  London,  or  if 
any  secretary,  accountant,  or  other  person  verifying  any  such  account  or 
average,  shall  return  or  deliver  to  the  commissioners  of  stamps  any  false 
account  or  return  of  such  averages,  the  corporation,  company  or  copart- 
nership, or  persons  or  person  to  whom  any  such  account  or  averages,  or 
such  secretary,  accountant,  or  person  verifying  the  account,  shall  belong, 
shall  forfeit  for  every  such  offence  the  sum  of  500?. ;  and  the  secretary  or 
other  person  so  offending  shall  also  forfeit  for  every  such  offence  the  sum 
of  100?. ;  and  any  secretary,  accountant,  or  other  person  who  shall  know- 
ingly and  wilfully  take  any  false  oath  as  to  any  such  account  or  averages, 
shall  be  subject  to  such  pains  and  penalties  as  are  by  any  law  in  force  at 
the  time  of  taking  such  oath  enacted,  as  to  persons  convicted  of  wilful 
and  corrupt  perjury." 

Uniting  of  Banks  of  Issue. — A  provision  is  made  for  the  purpose  of 
facilitating  the  uniting  together  of  banking  establishments,  as  far  as  re- 
gards the  circulation  of  their  notes,  thus  : — 

"  And(y)  be  it  enacted,  that  in  case  it  shall  be  made  to  appear  to  the 
commissioners  of  stamps  and  taxes,  at  any  time  hereafter,  that  any  two  or 
more  banks,  each  such  bank  consisting  of  not  more  than  six  persons,  have, 
by  written  contract  or  agreement  (which  contract  *or  agreement  p . ,  „-. 
shall  be  produced  to  the  said  commissioners,)  become  united  sub-  *-  -I 
sequently  to  the  passing  of  this  act,  it  shall  be  lawful  to  the  said  com- 
missioners, upon  the  application  of  such  united  bank,  to  certify,  in  man- 
ner hereinbefore  mentioned,  the  aggregate  of  the  amounts  of  bank  notes 
which  such  separate  banks  were  previously  authorized  to  issue,  and  so 
from  time  to  time ;  and  every  such  certificate  shall  be  published  in  man- 
ner hereinbefore  directed;  and  from  and  after  such  publication,  the 
amount  therein  stated  shall  be  and  be  deemed  to  be  the  limit  of  the 

{y)  1  &  8  Vict.  c.  32,  s.  16. 


313  GRANT    ON    Till:    LAW    OF    BANKING. 

amount  of  bank  Qotefl  whioh  such  united  bank  may  have  in  circulation: 

provided  always,  that  it  shall  nut  be  law  Till   for  any  such  united   hank  to 

issue  hank  notes  at  any  time  after  the  number  of  partners  therein  shall 
exceed  Biz  in  the  whole." 

Bank  '>'  Lie*  rues. — The  licensing  of  hankers  to  act  as  such,  i<  regu- 
lated thus : — 

«  And(z)  be  it  enacted,  thai  it  .-hall  be  lawful  for  any  two  or  more  of 
the  commissioners  of  stamps  to  grant  to  all  persons  carrying  on  tin-  busi- 
ness of  bankers  in  England  (except  a-  aforesaid,)  who  shall  require  the 
Bame,  licenses  authorizing  such  persons  to  issue  such  promissory  n 
and  to  draw  and  issue  such  hills  of  exchange  as  aforesaid,  on  unstamped 
paper j  which  said  licenses  shall  lie  and  are  hereby  respectively  charged 
with  a  stamp  duty  of  thirty  pounds  for  every  Buch  license. 

••  And('/)  that  a  separate  license  -hall  he  taken  out  iii  respect  of  every 
town  or  place  where  any  Buch  unstamped  promissory  notes  or  hills  of  ex- 
change as  aforesaid  shall  he  issued  <>r  drawn  :  provided  always,  that  no 
person  or  persons  shall  he  obliged  to  take  out  more  than  four  licenses  in 
all  for  any  number  of  towns  or  places  in  England;  and  in  case  any  per- 
son or  persons  shall  issue  or  draw  such  unstamped  notes  or  hills  as  afore- 
Bald,  at  more  than  four  different  towns  or  places,  then,  after  taking  out 
three  distinct  licenses  for  three  of  such  towns  or  places,  such  person  or 
persons  shall  be  entitled  to  have  all  the  rest  of  such  towns  or  place-  in- 
cluded in  a  fourth  license. 

"  And(o)  he  it  enacted,  that  every  hanker  who  shall  he  liable  by  law 
to  take  out  a  license  from  the  commissioners  of  stamps  and  taxes,  to 

authorize  the  issuing  of  notes  or  bills,  shall  take  out  a  separate  and  dis- 
tinct license  for  every  town  or  place  at  which  he  shall,  by  himself  or  his 
agent,  issue  any  notes  or  hills  requiring  such  license  to  authorize  the 
issuing  thereof,  anything  in  any  former  act  contained  to  the  contrary 
thereof  notwithstanding: 

•  •  Provided  always,  that  no  banker,  who,  on  or  before  the  6th  May, 
'\<\\,  had  taken  out  four  such  licenses,  which  on  the  said  last-mentioned 
r*ii~i  ^'iy  were  resPec'tively  in  force,  for  the  issuing  of  any  such  *notefl 
L  J  or  bills,  at  more  than  four  separate  towns  or  places,  shall  at  any 

time  hereafter  be  required  to  take  out  or  to  have  in  force  at  one  and  the 
same  time  more  than  four  such  licenses,  to  authorize  the  issuing  of  such 
notes  or  bills,  at  all  or  any  of  the  same  towns  or  places  specified  in  such 
licenses  in  force  on  the  said  6th  .May,  1844,  and  at  which  towns  or  places 

respi  Lch  hankers    had  on  or   before  the  said    last-mentioned   day 

issued  Buch  notes  or  bills  in  pursuance  of  such  licenses  or  any  of  them 
r<  spectively. 

■•  And('j  he  it  further  enacted,  that  every  license  granted  under  the 
authority  oi'  this  act  f.i  Geo.  IV.  o.  23,)  -hall  specify  all  the  particulars 
required  bj  law  to  he  specified  in  licenses  to  he  taken  out  by  persona 
issuing  promissory  notes,  payable  to  bearer  on  demand,  and  allowed  to 

he  reissued;   ami  every  such  license  which  shall  he  granted  between  the 

•  ••■  ■     [V.C.       .  ?.  2.  (a)  Id.  s.  3. 

\b)   7  k  ti  Vict.  c.  32,  s.  22.         (c)  0  Geo.  IV.  c.  23,  s.  4  ;  see  also  s.  5. 


COUNTRY  BANKS,  AND  BANK  NOTES.        319 

tenth  day  of  October  and  the  eleventh  day  of  November  in  any  year, 
shall  be  dated  on  the  eleventh  day  of  October,  and  every  such  license 
which  shall  be  granted  at  any  other  time  shall  be  dated  on  the  day  on 
which  the  same  shall  be  granted  ;  and  every  such  license  shall  (notwith- 
standing any  alteration  which  may  take  place  in  any  copartnership  of 
persons  to  whom  the  same  shall  be  granted,)  have  effect  and  continue  in 
force  from  the  day  of  the  date  thereof,  until  the  tenth  day  of  October 
then  next  following,  both  inclusive,  and  no  longer." 

Stamped  Bank  Notes. — Bankers  are  prohibited  from  issuing  their 
promissory  notes  on  stamped  paper,  thus : — 

"  Provided  always,(e?)  that  if  any  banker  or  bankers,  who  shall  take 
out  a  license  under  the  authority  of  this  act,  shall  issue,  under  the 
authority  either  of  this  or  any  other  act,  any  unstamped  promissory  notes 
for  payment  of  money  to  the  bearer  on  demand,  such  banker  or  bankers 
shall,  so  long  as  he  or  they  shall  continue  licensed  as  aforesaid,  make 
and  issue  on  unstamped  paper  all  his  or  their  promissory  notes  for  pay- 
ment of  money  to  the  bearer  on  demand,  of  whatever  amount  such  notes 
may  be ;  and  it  shall  not  be  lawful  for  such  banker  or  bankers,  during 
the  period  aforesaid,  to  issue  for  the  first  time,  any  such  promissory  notes 
as  aforesaid,  on  stamped  paper." 

Security  on  Issue  of  Unstamped  Bank  Notes. — Bankers  licensed  to 
issue  their  unstamped  paper,  are  required  to  give  security,  thus : — 

"  And(c)  be  it  further  enacted,  that  before  any  license  shall  be  granted 
to  any  person  or  persons  to  issue  or  draw  any  unstamped  promissory 
notes  or  bills  of  exchange,  under  the  authority  of  this  act,  such  person 
or  persons  shall  give  security,  by  bond,  to  his  majesty,  *his  heirs  pmjoi 
and  successors,  with  a  condition,  that  if  such  person  or  persons  L  J 
do  and  shall  from  time  to  time  enter  or  cause  to  be  entered  in  a  book  or 
books  to  be  kept  for  that  purpose,  an  account  of  all  such  unstamped 
promissory  notes  and  bills  of  exchange  as  he  or  they  shall  so  as  afore- 
said issue  or  draw,  specifying  the  amount  or  value  thereof  respectively, 
and  the  several  dates  of  the  issuing  thereof :  and  in  like  manner  also,  a 
similar  account  of  all  such  promissory  notes,  as,  having  been  issued  as 
aforesaid,  shall  have  since  been  cancelled,  and  the  dates  of  the  cancelling 
thereof,  and  of  all  such  bills  of  exchange  as,  having  been  drawn  or  issued 
as  aforesaid,  shall  have  been  paid,  and  the  dates  of  the  payment  thereof; 
and  do  and  shall  from  time  to  time,  when  thereunto  requested,  produce 
and  show  such  accounts  to,  and  permit  the  same  to  be  examined  and 
inspected  by,  the  said  commissioners  of  stamps,  or  any  officer  of  stamps 
appointed  under  the  hands  and  seals  of  the  said  commissioners  for  that 
purpose )  and  also  do  and  shall  deliver  to  the  said  commissioners  of  stamps 
half-yearly,  (that  is  to  say,)  within  fourteen  days  after  the  first  day  of 
January  and  the  first  day  of  July  in  every  year,  a  just  and  true  account 
in  writing,  verified  upon  the  oaths  or  affirmations,  (which  any  justice  of 
the  peace  is  hereby  empowered  to  administer,)  to  the  best  of  the  know- 
ledge and  belief  of  such  person  or  persons,  and  of  his  or  their  cashier, 
accountant,  or  chief  clerk,  or  of  such  of  them  as  the  said  commissioners 

(d)  Id.  s.  6.  (e)  Id.  s.  7. 

February,  1857.— 22 


ANT    ON    THE    LAW    OF    I!  AN  KING. 

shall  require,  of  the  amount  or  value  of  all  unstamped  promissory  notes 
and  bills  of  exchange,  issued  under  the  provisions  of  this  or  any  former 
art.  ill  emulation  within  the  meaning  of  this  act  on  a  given  day,  (that 
u  to  Bay,)  on  Saturday  in  every  week,  for  the  space  of  half  a  year  prior 
to  the  half-yearly  day  immediately  preceding  the  delivery  of  such  ace., nut, 
ther  with  the  average  amount  or  value  of  such  notes  and  bills  so  in 
circulation,  according  to  such  account;  and  also  do  and  shall  payor 
cause  to  be  paid  to  the  receiver-general  of  stamp  duties  in  Great  Britain, 
or  to  some  other  person  duly  authorized  by  the  commissioners  of  stamps 
to  receive  the  same,  as  a  composition  for  the  duties  which  would  other- 
wise have  been  payable  for  such  promissory  notes  and  bills  of  exchange 
issued  or  in  circulation  during  such  half-year,  the  sum  of  three  shillings 
and  six-pence  for  every  one  hundred  pounds,  and  also  for  the  fractional 
part  of  one  hundred  pounds,  of  the  said  average  amount  or  value  of  such 
notes  and  hills  in  circulation,  according  to  the  true  intent  and  meaning 
of  this  act;  and  on  due  performance  thereof  such  bond  shall  be  void, 
but  otherwise  the  same  shall  be  and  remain  in  full  force  and  virtue. 

«And(/)  be  it  further  enacted,  that  every  unstamped  promissory  note 
payable  to  the  bearer  on  demand,  issued  under  the  provisions  of  this  act, 
shall,  for  the  purpose  of  payment  of  duty,  be  deemed  to  be  in  circulation 
from  the  day  of  the  issuing  to  the  day  of  the  cancelling  thereof,  both 
days  inclusive,  excepting  nevertheless  the  period  during  which  such 
note  shall  be  in  the  hands  of  the  banker  or  bankers  who  first  issued  the 
r*lim  same>  or  by  whom  the  same  shall  be  expressed  to  be  *payable ; 
L  ""  -I  and  that  every  unstamped  promissory  note  payable  to  order,  and 
every  unstamped  bill  of  exchange  so  as  aforesaid  issued,  shall  for  the 
purpose  aforesaid  be  deemed  to  be  in  circulation  from  the  day  of  the 
issuing  to  the  day  of  the  payment  thereof,  both  days  inclusive  : 

'•  Provided  always,  that  every  such  promissory  note  payable  to  order, 
and  bill  of  exchange  as  aforesaid,  which  shall  be  paid  in  less  than  seven 
days  from  the  issuing  thereof,  shall,  for  the  purpose  aforesaid,  be  included 
in  the  account  of  notes  and  bills  in  circulation  on  the  Saturday  next 
after  the  day  of  the  issuing  thereof,  as  if  the  same  were  then  actually  in 
circulation. 

«  An<l(;/)  be  it  further  enacted,  that  in  every  bond  to  be  given  pur- 
suant to  tne  directions  of  this  act,  the  person  or  persons  intending  to 
or  draw  any  such  unstamped  promissory  notes  and  bills  of  exchange 
■i-'  said,  Or  BUoh  and  so  many  of  the  said  persons  as  the  commissioners 

imps  shall  require,  shall  be  the  obligors;  and  every  such  bond  shall 
ken   in   the  sum  of  one  hundred  pounds,  or  in  such   larger  sum  as 

said  commissioners  of  stamps  may  judge  to  be  the  probable  amount 
of  the  composition  or  duties  that  will  be  payable  from  such  person  or 
persons,  under  or  by  virtue  of  this  act,  during  the  period  of  one  year; 
and  it  shall  be  lawful  f>>r  the  said  commissioners  to  fix  the  time  or  times 
of  payment  of  the  said  composition  or  duties,  and  to  specify  the  same  in 
the  condition  to  every  Buoh  bond;  and  every  such  bond  maybe  required 
to  be  renewed  from  time  to  time,  at  the  discretion  of  the  said  commis- 

(/)  it  Geo.  IV.  c.  23.  s.  8.  9  Geo.  IV.  c.  23,  s.  9. 


COUNTRY    BANKS,    AND    BANK    NOTES.  321 

sioners  and  as  often  as  the  same  shall  be  forfeited,  or  the  parties  to  the 
same,  or  any  of  them,  shall  die,  become  bankrupt  or  insolvent,  or  reside 
in  parts  beyond  the  seas." 

Alteration  of  Partnership,  &c. — Enactments  are  made  to  meet  changes 
in  partnership  in  banks,  and  requiring  fresh  securities  in  such  cases,  and 
enforcing  the  renewal  of  the  bonds,  thus  : — 

(i  And(7A  be  it  further  enacted,  that  if  any  alteration  shall  be  made  in 
any  copartnership  of  persons  who  shall  have  given  any  such  security  by 
bond  as  by  this  act  is  directed,  whether  such  alteration  shall  be  caused 
by  the  death  or  retirement  of  one  or  more  of  the  partners  of  the  firm, 
or  by  the  accession  of  any  additional  or  new  partner  or  partners,  a  fresh 
bond  shall  be  given  by  the  remaining  partner  or  partners,  or  the  persons 
composing  the  new  copartnership,  as  the  case  may  be,  which  bond  shall 
be  taken  as  a  security  for  the  duties  which  may  be  due  and  owing  or 
may  become  due  and  owing,  in  respect  of  the  unstamped  notes  and  bills 
which  shall  have  been  issued  by  the  persons  composing  the  old  copart- 
nership, and  which  shall  be  in  circulation  at  the  time  of  such  alteration, 
as  well  as  for  duties  which  shall  or  may  be  or  become  due  or  owing  in 
respect  of  the  unstamped  *notes  and  bills  issued  or  to  be  issued  r*45Q-| 
by  the  persons  composing  the  new  copartnership ;  provided  that  L         J 
no  such  fresh  bond  shall  be  rendered  necessary  by  any  such  alteration  as 
aforesaid,  in  any  copartnership  of  persons  exceeding  six  in  number,  but 
that  the  bonds  to  be  given  by  such  last-mentioned  copartnerships  shall 
be  taken  as  securities  for  all  the  duties  they  may  incur  so  long  as  they 
shall  exist,  or  the  persons  composing  the  same,  or  any  of  them,  shall 
carry  on  business  in  copartnership  together,  or  with  any  other  person  or 
persons,  notwithstanding  any  alteration  in  such  copartnership ;  saving 
always  the  power  of  the  said  commissioners  of  stamps  to  require  a  new 
bond,  in  any  case  where  they  shall  deem  it  necessary  for  better  securing 
the  payment  of  the  said  duties. 

«  And(r)  be  it  further  enacted,  that  if  any  person  or  persons  who  shall 
have  given  security,  by  bond,  to  his  majesty,  in  the  manner  hereinbefore 
directed,  shall  refuse  or  neglect  to  renew  such  bond  when  forfeited,  and 
as  often  as  the  same  is  by  this  act  required  to  be  renewed,  such  person 
or  persons  so  offending  shall  for  every  such  offence  forfeit  and  pay  the 
sum  of  one  hundred  j^ounds." 

Definition  of  Bank  Notes.— What  shall  be  deemed  bank  notes,  witbin 
the  meaning  of  the  Bank  Charter  Act,  of  1844,  (7  &  8  Vict.  c.  32,)  as 
regards  the  enactments  concerning  stamps,  has  been  subsequently  defined, 
as  follows^) : — 

»  All  bills,  drafts  or  notes,  other  than  notes  of  the  Bank  of  England, 
which  shall  be  issued  by  any  banker,  or  the  agent  of  any  banker  for  the 
payment  of  money  to  the  bearer  on  demand;  and  all  bills,  drafts  or  notes 
so  issued  which  shall  entitle  or  be  intended  to  entitle  the  bearer  or  holder 
thereof,  without  indorsement,  or  without  any  further  or  other  indorse- 
ment than  may  be  thereon  at  the  time  of  the  issuing  thereof,  to  the  pay- 

(h)  Id.  s.  10.  (0  9  Geo.  IV.  c.  23,  s.  11. 

(k)   17  &  18  Vict.  c.  83,  s.  11. 


t;  It  ANT    ON    THE    LAW    OF    BARKING. 

in. -nt  of  any  sum  of  money  on    demand,  whether  the  same   shall  be  so 

expressed  or  Dot,  in  whatever  form  and  by  whomsoever  such  bills,  drafts 

or  notes  shall  be  drawn  or  made:  Bhall  be  deemed  to  he  bank  notes  of 

nker  by  whom  nr  by  whose  agent  the  same  shall  be  issued  within 

eaning  of  the  said  act. 

••  All   bills. (7)  drafts  and  notes  which  by  or  under  this  act,  or  7  &  8 

Vict.  c.  32,  are  declared  or  deemed  to  be  bank  notes,  shall  be  liable  to 

the   -tamp   duties   and   composition  for  Btamp  duties,  imposed  or  payable 
under  any  act  or  acts  in  force  upon  or  in  respect  of  promissory  notes, 
for   the   payment  of  money  to  the  bearer  on  demand  ;  and  all  clauses, 
isions,  regulations,  penalties  and  forfeitures,  contained  in  any  aet 
or  acts  relating  to  the  issuing  of  such  promissory  notes,  or  for  securing 
id  stamp  duties  and  composition  respectively,  or  for  preventing  or 
.  .,  punishing  frauds   or  evasions  in  relation  thereto,  shall  *respec- 
L     '    J  tively  be  deemed  to  apply  to  all  such  bills,  drafts  and  notes  as 
jaid,  and   to  the  Btamp  duties  and  composition  payable  upon  or  in 
i  thereof,  &c." 
Stamps  on  Bankers'  Acknowledgments,  &c. — We  may  here  recite  a 
oactment,  abolishing  the  exemptions  from  stamp  duties,  granted  by 
former  statutes,  on  bankers'  letters,  acknowledging  the  safe   arrival   of 
I  ities  for  money  ;  thus  : — 
"Whereas(m)  under  and  by  virtue  of  certain  acts  relating  to  the 
Btamp  duties,  letters  by  the  general  post  acknowledging  the  safe  arrival 
of  any  bills  of  exchange,  promissory  notes,  or  other  securities  for  money, 
ccepted  from  the  Btamp  duty  granted  and  imposed  on  receipts  or 
discharges  given  for  or  upon  the  payment  of  money;  be  it  enacted,  that 
the  said  exemption  .shall  be  and  the  same  is  hereby  repealed." 
Bui  the  exemption  from  receipt  stamps  remains  on  :(>/) 
•  •  Receipts  given  for  money  deposited  in  any  bank  or  in  the  hands  of 
1  anker,  to  be  accounted  for,  whether  with  interest  or  not, provided 
th    same  be  not  expressed  to  be  received  of  or  by  the  hands  of  any  other 
than    the  person  to  whom   the  same   is   to  be   accounted  for ;   provided 
alwa\-.  that  this  exemption  shall  not  extend  to  receipts  or  acknowledg- 
ment- for  sums  paid  or  deposited  for  or  upon  lettersof  allotment  of  shares, 
or  in  respect  of  calls  upon  any  scrip  or  shares  of  or  in  any  join t-stock  or 
other  company,  or  proposed  or  intended  company,  which  said  last-men- 
tioned  receipts  or  acknowledgments,  by  whomsoever  given,  shall  be  liable 
to  the  duty  by  this  act  charged  on  receipts." 

Post  dating  Bank  Notes,  &c. — To  p<>st  date  an  unstamped  bankers' 
promissory  note,  or  bill  of  exchange,  is  punishable,  as  follows: — 
"  \iel("j  be  it  further  enacted,  that  if  any  person  or  persons  who  shall 

be  1  i  *  - «  osed  Under  the  provisions'  of  this  act,  shall  draw  or  issue,  or  cause 

to  1"'  drawn  or  issued,  upon  unstamped  paper,  any  promissory  note  pay- 

abli    to  Order,  or  any  bill    of  exchange  which  shall    bear  date  subsequent 

t    the  day  on  which  it  shall  he  issued,  the  person  or  persons  so  offending 

7  ft  18  Vict  c.  83,  a.  12.     As  in  tin-  composition  mentioned  above,  see  7  & 
23,  24,  and  19  .v.  20  Vv  t.  c.  20. 
r  ft  is  VI  i.  c.  B3,  -.  L3 
L6ft  IT  Vi.t.  c.  59,  SCbed.  (o)  9  Geo.  IV.  c.  23,  s.  12. 


COUNTRY  BANKS,  AND  BANK  NOTES.        323 

shall  for  every  such  note  or  bill  so  drawn  or  issued  forfeit  the  sum  of  one 
hundred  pounds. 

*"Provided(p)  always,  that  nothing  in  this  act  (viz.,  9  Geo.  r;|..,91 
IV.  c.  23)  contained  shall  extend  or  be  construed  to  extend  to  L  -J 
exempt  or  relieve  from  the  forfeitures  or  penalties  imposed  by  any  act  or 
acts  now  in  force,  upon  persons  issuing  promissory  notes  or  bills  of  ex- 
change not  duly  stamped  as  the  law  requires,  any  person  or  persons  who 
under  any  colour  or  pretence  whatsoever  shall  issue  any  unstamped  pro- 
missory note  or  bill  of  exchange,  unless  such  person  or  persons  shall  be 
duly  licensed  to  issue  such  note  or  bill  under  the  provisions  of  this  act, 
and  such  note  or  bill  shall  be  drawn  and  issued  in  strict  accordance  with 
the  regulations  and  restrictions  herein  contained.'' 

Allowance  of  Stamps. — The  cancelling  and  allowance  of  useless  stamps 
are  thus  provided  for  : — 

"  And(^)  whereas  it  may  happen  that  bankers  who  may  be  desirous  to 
issue  unstamped  promissory  notes,  payable  to  bearer  on  demand,  under 
the  provisions  of  this  act,  may  have  provided  themselves  with  stamps  for 
such  notes,  which  may  not  have  been  issued,  and  which  may  by  this  act 
be  rendered  useless  or  unnecessary,  and  it  is  expedient  to  enable  the 
commissioners  of  stamps  to  cancel  and  allow  such  stamps  in  manner  here- 
inafter mentioned : 

"Be  it  therefore  enacted,  that  where  any  banker  or  bankers,  who  shall 
take  out  a  license  under  the  authority  of  this  act,  shall  have  in  his  or 
their  possession  stamps  for  reissuable  promissory  notes,  payable  to  the 
bearer  on  demand,  which  shall  be  rendered  useless  or  unnecessary  in  conse- 
quence of  such  banker  or  bankers  electing  to  issue  such  notes  on  unstamped 
paper,  under  the  provisions  of  this  act,  it  shall  be  lawful  for  the  said 
commissioners  of  stamps,  and  they  are  hereby  authorized  and  empowered, 
to  cancel  and  allow  such  stamps  so  as  aforesaid  rendered  useless  and  un- 
necessary, and  to  repay  the  amount  or  value  thereof  in  money,  deduct- 
ing therefrom  the  sum  of  one  pound  ten  shillings  for  every  one  hundred 
pounds,  and  so  in  proportion  for  any  greater  or  less  sum  than  one  hun- 
dred pounds  of  such  amount  or  value  j  provided  proof  be  made  by  affida- 
vit or  affirmation,  to  the  satisfaction  of  the  said  commissioners,  that  such 
stamps  have  not  been  issued;  and  provided  application  be  made  for 
such  allowance  within  six  calendar  months  next  after  the  passing  of  this 
act." 

(p)  9  Geo.  IV.  c.  23,  s.  13.  Then  s.  14  provides  that  all  pecuniary  forfeitures 
and  penalties  incurred  under  the  act  are  to  be  recovered  in  the  Court  of  Exche- 
quer, &c. ;  s.  15  saves  the  privileges  of  the  Bank  of  England. 

(q)  9  Geo.  IV.  c.  23,  s.  16. 


GRANT  ON  THE  LAW  OF  BANKING. 

[   153]  CHAPTER  XV. 

COPARTNERSHIPS,  ETC.,   I  M>!  K  7  <;KO.  IV.  C.  46. 

I :  now  becomes  necessary  to  Btate  in  what  respects  the  legislature  has 

red,  to  qualify  or  regulate  the  general  law,  with  respect  to  bank- 

d  cases  where  a  great  number  of  persons  combine  or  unite,  for  the 

se  of  carrying  on  a  banking  establishment.     To  do  this  effectually, 

and  in  order  to  secure  accuracy,  we  must  place  before  the  reader,  in  some 

•   -.  the  actual  words  of  the  legislature,  together  with  such  expositions 

of  them  as  have  been  made,  from  time  to  time,  by  the  courts  of  law  and 

equity,  on  occasions  when  questions  have  arisen,  upon  the  intent  and 

m  ailing  of  the  statutes  respectively  establishing  banking  copartnerships, 

joint  stock  banking  companies,  and  savings'  banks. 

Hanks  which  have  been  established  in  conformity  with  the  enactments 
of  the  first-mentioned  branch  of  this  department  of  the  law,  are  com- 
monly known  as  banking  copartnerships,  the  term  being  used  in  contra- 
di-tinction  to  private  partnerships  in  banking  concerns,  on  the  one  hand, 
and  to  joint  stock  companies  engaged  in  banking,  on  the  other. 

By  an  act  of  the  reign  of  Geo.  1II.,(«)  it  was  forbidden  to  erect  any 
corporate  bank  whatever,  or  any  bank  where  the  number  of  bankers  in 
partnership  should  exceed  six,  so  as  "to  borrow,  owe,  or  take  up  any 
Bum  or  sums  of  money,  on  their  bills  or  notes,  payable  on  demand,  or  at 
any  less  hum  than  six  months  from  the  borrowing  thereof,"  during  the 
continuance  of  the  privileges  secured  to  the  Bank  of  England,  by  former 

of  parliament. 
.      .   ~       *In  1S2G,  the  statute  now  in  force  was  passed;   the  first  sec- 
L  -I  tion  of  which  enacts  : — 

"  That  from  and  after  the  passing  of  this  act,  it  shall  and  may  be  law- 
ful for  any  bodies  politic  or  corporate  erected  for  the  purposes  of  bank- 
i  for  any  number  of  persons  united  in  covenants  or  copartnership, 
although  such  persons  so  united,  or  carrying  on  business  together,  shall 
-t  of  more  than  six  in  number,  to  carry  on  the  trade  or  business  of 
bankers  in    England,  in  like  manner  as  copartnerships  of  bankers,  con- 
6  is  ting  of  not    more   than  six  persons  in  number,  may  lawfully  do;  and 
I'll  bodies  politic  or  corporate,  or  such  persons  so  united  as  afore- 
-  id,  to  make  and  issue  their  hills  or  notes  at  any  place  or  places  iii  Eng- 
eding  the  distance  of  sixty-five  miles  from  London,  payable  on 
d(  mand  or  otherwise,  at  some  place  or  places  specified  upon  such  bills  or 
-  exceeding  the  distance  of  s  i  x  t  \  - 1  i  \ .  ■  miles  from  London,  and  not 
here,  and  to  borrow,  owe,  <</  tah  "/<,(/-)  any  sum  or  sums  of  money 
on  their  hills  or  notes  so  made  and  issued  at  any  such  place  or  places  as 
lid  : 

Geo    (II.  c.  28,  s.  15. 
tpra,  p.  439,  for  i  ins;  and  see  also  cases  infra, p. 


COPARTNERSHIPS,    ETC.  325 

"Provided  always,  that  such  corporations  or  persons  carrying  on  such 
trade  or  business  of  bankers  in  copartnership,  shall  not  have  any  house 
of  business  or  establishment  as  bankers  in  London,  or  at  any  place  or 
places  not  exceeding  the  distance  of  sixty-five  miles  from  London ;  and 
that  every  member  of  any  such  corporation  or  copartnership  shall  be  lia- 
ble to  and  responsible  for  the  due  payment  of  all  bills  and  notes  which 
shall  be  issued,  and  for  all  sums  of  money  which  shall  be  borrowed,  owed, 
and  taken  up  by  the  corporation  or  copartnership,  of  which  such  person 
shall  be  a  member,  such  person  being  a  member  at  the  period  of  the  date 
of  the  bills  or  notes,  or  becoming  or  being  a  member  before  or  at  the 
time  of  the  bills  or  notes  being  payable,(c)  or  being  such  member  at  the 
time  of  the  borrowing,  owing,  or  taking  up  of  any  sum  or  sums  of  mo- 
ney upon  any  bills  or  notes  by  the  corporation  or  copartnership,  or  while 
any  sum  of  money  on  any  bills  or  notes  is  owing  or  unpaid,  or  at  the 
time  the  same  became  due  from  the  corporation  or  copartnership ;  any 
agreement,  covenant,  or  contract  to  the  contrary  notwithstanding." 

Liability  of  Members. — This  first  section,  it  maybe  observed,  con- 
siderably enlarged  the  responsibility  attaching  at  common  law  to  mem- 
bers of  ordinary  partnerships  :  *it  provides  that  every  member  p,,--, 
shall  be  liable  for  all  bills,  &c,  such  person  being  a  member  at  L  J 
the  date  of  the  bills ;  or  at  the  time  of  their  being  payable ;  or  while 
owing  or  unpaid ;  so  that  any  person,  being  a  member,  at  any  time  be- 
tween the  date  of  the  contract,  and  the  time  when  the  debt  arising  there- 
from is  satisfied,  is  to  become  liable  for  its  payment.  A  person  might 
not  be  a  party,  or  liable  to  the  contract ;  he  might  not  be  a  member  of 
the  copartnership  at  the  time  when  proceedings  were  taken  to  enforce  it, 
but,  by  becoming  a  member  at  an  intermediate  period,  between  the  con- 
tract and  the  judgment,  he  would  thereby  render  himself  liable  to  the 
payment.  This  is  no  small  advantage,  in  theory,  given  to  the  creditor 
of  such  a  concern ;  it  is  apparently  a  liability  attaching  to  any  person 
becoming  a  member  at  any  time  between  the  above-mentioned  periods ; 
practically,  the  advantage  appears  to  prove  of  little  or  no  avail,  such  is 
the  difficulty,  delay,  and  expense  of  realizing  it. 

Then  the  act  goes  on  to  say,(cZ)  that  judgment  being  obtained  against 
the  public  officer,  execution  shall  issue  against  any  existing  member,  all 
such  being  virtually  parties  to  the  proceedings  upon  which  judgment  has 
been  obtained ;  if  this  execution  is  ineffectual,  then  the  plaintiff  may 
issue  execution  against  any  persons  who  were  members  at  the  time  when 
the  contract  was  entered  into ;  secondly,  against  persons  who  became 
members  at  any  time  before  such  contract  was  executed ;  thirdly,  against 
persons  who  were  members  at  the  time  the  judgment  was  obtained. 

Then  there  is  a  limitation  of  three  years, (d)  within  which  only  execution 
is  to  issue  against  persons  of  the  three  last-mentioned  classes.  This  is 
clearly  the  case  at  law,  but  the  statute  is  silent  as  to  proceedings  in 
equity  j  though  it  contemplates  equitable  liabilities,  as  well  as  legal  lia- 

(c)  See  Ex  parte  Prescott,  1  Mont.  &  C.  611.  This  section  makes  every  member 
of  the  copartnership  liable,  upon  outstanding  notes  of  the  firm,  although  he  were 
aot  a  member  when  such  notes  issued. 

(d)  Sect.  13  infra,  p.  480. 


GBANI    OX    TJ1E    LAW    OF    BANKING. 

.,  bilities,  it  *doea  not  furnish,  on  the  face  of  it,  any  particular 
L     ''  J  remedy  for  equitable  Liability  - 

V  rertheless,  in  equity  also,  claims  are  held  to  be  barred  by  the  lapse 
of  the  three  years. 

Thus,  where  a  testator  died,  possessed  of  shares  in,  and  a  member  of, 
a  banking  copartnership,  and  subject  to  its  liabilities:  after  the  expira- 
tion of  three  years  an  administration  Buit  was  instituted  againsl  his  estate  ; 
the  proceedings  against  the  public  officer  on  which  the  judgments  were 
obtained  were  adopted  sometime  after  the  testator's  death;  it  was  ad- 
mitted  that  execution  could  not  issue  against  the  executors,  wbo  were 
not  registered  members  ;  in  fact,  that  case  is  unprovided  for  by  the  statute. 
Now  it  is  to  be  remembered,  that  the-  testator's  liability  in  his  lifetime 
was  to  have  execution  issued  against  him  and  his  property,  before,  but 
imt  after,  the  expiration  of  the  three  years,  from  the  time  of  his  ceasing 
a  member.  That  alone  was  his  liability,  notwithstanding  the  gene- 
ral wmds  in  the  first  clause  of  the  statute.  Accordingly,  if  in  a  suit 
instituted  as  above  mentioned,  the  common  decree  has  been  made  for 
taking  an  account  of  the  deceased's  debts,  and  persons  who  were  creditors 
of  the  banking  company  at  his  death,  come  in  under  the  decree  and  claim 
to  be  creditors  of  the  deceased,  their  claims  will  be  held  to  be  barred  by 
the  lapse  of  three  years. 

It  seems  to  be  free  from  doubt,  that  if  the  courts  of  equity  can  give 
any  relief  at  all  against  assets  of  a  deceased  partner,  it  can  only  be  to  a 
party  applying  before  the  legal  liability  under  this  act  would  have  ex- 
pired, if  the  party  had  remained  in  life.f/'l 

With  respect  to  the  restriction  of  six  partners,  &c,  and  to  that  of  six 
months,  within  which  notes,  &c.,  were  not  to  be  made  payable,  it  may 
r  I  --  ,  be  observed,  that  it  never  was  held,  *that  the  statute  referred  to 
L  '  J  any  but  partnerships  of  persons  substantially  combined  for  the 
purposes  of  banking;  therefore,  there  was  never,  any  more  than  at  pre- 
sent,  any  thing  to  prevent  merchants  from  issuing  bills  short  of  six 
months'  date,  although  the  house,  issuing  them,  consisted  of  more  than 
six  partners,  if,  in  reality,  they  were  not  bankers,  and  the  bills,  &c., 
were  only  issued  for  purposes  of  commerce. (g) 

With  respect,  generally,  to  the  enactments  in  the  above  section,  it  will 
a,  that  they  prescribe  the  cases,  and  the  circumstances,  &c.,  in 
which  copartnerships,  consisting  of  more  than  six  persons,  may  be 
bankers,  in  England;  with  a  prohibition  of  such  persons,  to  have  any 
house  of  business,  a-  bankers,  in  London,  or  at  any  place,  not  exceeding 
the  distance  of  sixty-five  miles,  from  London.  Now,  in  order  to  ascer- 
tain the  precise  effect  of  this  prohibition,  on  looking  into  the  decisions 
on  the  subje<  t,  we  find  it  is  settled,  that,  in  order  thai  the  defendant,  in 
otion  brought  by  a  banking  copartnership,  in  a  manner  that  they 

J.,  <h.  199  j  s.  (\.  1  De  <;..  M.  &  Q.  589. 
Barker  v.  Buttrc      1  Beav.  134,  recoj  nized  I  ■■<■  Ld.  Truro,  C,  in  Ex  parte 
Goutuwaite,  3  Mac.  &  G.  : 

•wler,  2  Chit  B.  ''..  I  Stark.  I:.  159;  Perringv.  Dunston, 

• npar<  England  v.  Anderson,  4  Scott,  107 ;  Broughton  v. 

'.-  Company,  3  B.  k  A.  1. 


COPARTNERSHIPS,    ETC.  327 

could  not,  but  for  this  act,  have  brought  an  action  in,  and  where,  there- 
fore, it  was  necessary  that  they  should  show  that  they  had  complied  with 
the  requisitions,  and  prohibitions  of  it,  an  attempt  to  show  that  the  body 
have  acted  illegally,  by  having  a  house  of  business,  within  the  prohibited 
distance  from  London,  will  fail,  unless  it  shows  that  their  legality  was 
already  thus  vitiated  at  the  date  of  the  contract  they  sue  upon,  or  at  the 
time  of  the  commencement  of  the  suit;  it  is  not  enough  to  show  their 
existence  to  have  been  illegal  at  any  time  ;  and  if,  in  order  to  make  all 
sure,  the  defendant  alleges,  as  a  reason,  why  he  should  not  be  bound  to 
answer  them,  that  their  existence  has  been  illegal,  from  the  formation  of 
the  partnership  until  the  commencement  of  the  suit,  he  must  i-*jkq-i 
*prove  the  illegal  existence  for  the  whole  of  that  period,  other-  L  J 
wise  his  excuse  will  be  incomplete,  and  he  must  fail  altogether. (7t) 

Drawing  Bills,  &c. — The  second  section  restrained  these  copartner- 
ships from  drawing  a  bill  of  exchange,  payable  by  an  agent,  in  London, 
&c. ;  but  for  those  provisions,  the  following  enactment  is  now  substi- 
tuted : — 

"  That  it  shall  be  lawful  for  any  body  politic  or  corporate  whatsoever, 
erected  or  to  be  erected,  and  for  any  other  persons  united  or  to  be  united 
in  covenants  or  partnership,  exceeding  the  number  of  six  persons  carry- 
ing on  business  as  bankers,  to  make  any  bill  of  exchange  or  promissory 
note  of  such  corporation  or  copartnership,  payable  in  London  by  any  agent 
of  such  corporation  or  copartnership  in  London,  or  to  draw  any  bill  of 
exchange  or  promissory  note  upon  any  such  agent  in  London,  payable  on 
demand  or  otherwise  in  London,  and  for  any  less  amount  than  50?.,  any- 
thing in  the  said  act  of  the  7th  Geo.  TV.  or  in  any  other  act,  to  the  con- 
trary notwithstanding."^') 

Name. — Banks  of  this  kind,  whether  corporate  or  unincorporated, 
generally  assume  a  name.  As  regards  corporate  banks,  established  under 
this  statute,  there  is  a  decision,  to  the  effect,  that  if  A.  invents,  or 
frames,  a  particular  name  for  a  bank,  and  a  body  of  persons,  without  the 
consent  of  A.,  adopt  such  name,  and  become  incorporated  bythat  name, 
A.  cannot  recover  damages  from  the  corporation,  for  taking  possession  of 
such  name,  and  using  it,  without  averring,  and  proving,  that  he  has 
carried  on  business,  as  a  banker,  under  such  name;(&)  and  so  has  been 
injured  by  their  assumption  of  it. 

Borrowing,  owing,  and  taking  up. — The  third  section  *it  is  pMcg-i 
unnecessary  to  state,  because  its  enactments  have  been  modified  L 
subsequently,  and  the  law  now  stands  thus  : — 

"  Any  body  politic(?)  or  corporate,  or  society  or  company  or  partnership, 
although  consisting  of  more  than  six  partners,  to  carry  on  the  trade  or 
business  of  banking  in  London,  or  within  sixty-five  miles  thereof,  pro- 
vided that  such  body  politic  or  society,  or  company  or  partnership,  do 

(li)  Hughes  v.  Thorpe,  5  M.  &  TV.  656  ;  Rarnford  v.  Copeland,  6  A.  &  E.  482. 

(i)  3  &  4  Will.  IV.  c.  83,  s.  2.  Bank  post  bills  issued  in  London  are  not  made, 
by  operation  of  7  Geo.  IV.  c.  46,  s.  15,  payable  at  the  branch  banks  of  the  Bank  of 
England.     Willis  v.  Bank  of  England,  4  A.  &  E.  21. 

(k)  Lawson  v.  Bank  of  London,  18  C.  B.  84. 

(/)  3  &  4  Will.  IV.  c.  98,  s.  3. 


[*4G0] 


328  GKANT    ON    THE    LA"VV    OF    BANKING. 

not  borrow,  owe,  or  take  up  in  England,  any  sum  or  sums  of  money  on 
their  bills  m-  notes,  payable  on  demand,  or  at  any  less  time  than  six 
months  from  the  borrowing  thereof,  during  the  continuance  of  theprivi- 
granted  by  this  "<■/,  (viz,  :;  \  4  Will.  IV.  o.  '.'S,  to  the  said  Governor 
aiul  Company  of  the  ]>auk  nf  England." 

The  acceptance  of  a  customer's  hill,  at  less  that  six  months'  date,  on 
account  of  a  balance  in  favour  of  the  customer,  i<  a  borrowing,  in  pointy 
of  law,  within  the  meaning  of  the  statute. (///) 

The  drawing  of  a  bill,  at  a  longer  period  than  six  months,  though  the 
acceptance  should  be  within  six  months  of  its  maturity,  would  be  a 
transaction  in  violation  of  the  provisions  of  the  statute,  and  all  persons, 
who  were  privy  to  it,  would  be  prevented  from  enforcing  the  acceptance; 
though  such  violation  of  the  prohibition  of  the  statute  would  nut  affect 
a  bona  fide  holder  without  notice. (ri\ 

A  firm  of  more  than  six  persons,  not  in  partnership  for  banking  pur- 
poses, does  not  appear  to  come  within  this  proviso.(o) 

The  effect  of  this  enactment  will  be  the  better  conceived,  from  advert- 
ing  to  the  circumstance,  that  the  average  date  of  bills  drawn  in  this 
country,  by  traders,  or  by  bankers,  to  represent  transactions  in  trade, 
are  almost  all  of  them  within  three  months,  excepting  those  from  the 
manufacturing  districts  of  Manchester,  Birmingham,  Sheffield,  and 
Leeds,  *which  are,  generally,  at  three  and  four  mouths  after 
date.(y/) 

Account  of  NameSf  &c. — The  next  enactment,  in  7  Geo.  IV.  c.  46,  is 
section  4.  thus  : — 

••And  be  it  further  enacted,  that  before  any  such  corporation  or  co- 
partnership, exceeding  the  number  of  six  persons  in  England,  shall 
begin  to  issue  any  bills  or  notes,  or  borrow,  owe,  or  take  up  any  money 
on  their  bills  or  notes,  an  account  or  return  shall  be  made  out,  accord- 
ing to  the  form  contained  in  the  schedule  marked  (A.)(y)  wherein 
shall  be  set  forth  the  true  names,  title  or  firm  of  such  intended  or 
existing  corporation  or  copartnership,  and  also  the  names  or  places  of 
abode  of  all  the  members  of  such  corporation,  or  of  all  the  partners  con- 
cerned or  engaged  in  such  copartnership,  as  the  same  respectively  shall 
appear  on  the  books  of  such  corporation  or  copartnership,  and  the  name 
or  firm  of  every  bank  or  banks  established  or  to  be  established  by  such 
corporation  or  copartnership,  and  also  the  nanus  and  places  of  abode  of 
two  or  more  persons,  being  members  of  such  corporation  or  copartnership, 
and  being  resident  in  England,  who  shall  have  been  appointed  public 
officers  of  such  corporation  or  copartnership,  together  with  the  title  of 
office  or  other  description  of  such  public  officer  respectively,  in  the  name 
of  any  one  of  whom  Bucb  corporation  shall  sue  and  be  sued,  as  herein- 


("n  Bank  of  England  r.  Anderson,  3  Bing.  N.  C.  589;  S.  <'..  2  Keen,  328 
Bank  of  England  w.  Booth,  2  Keen,  460j  7  Cla.  ,v  1".  509  :  per  Lid.  Denman,  I 
v.  Bond,  5  I!.  A   A'l.  .": 
[n\  Per  Oar.  3  Blng.  V  0.  665. 

P         _     .  Dunston,  By.  .v.  ,M.  426;  rid.  sap.  p.  457,  n.  {g). 

of  Banking,  |  London 
-   ■•  infra,  j 


COPARTNERSHIPS,    ETC.  329 

after  provided,  and  also  the  name  of  every  town  and  place  where  any  of 
the  bills  or  notes  of  such  corporation  or  copartnership  shall  be  issued  by 
any  such  corporation,  or  by  their  agent  or  agents,  and  every  such  amount 
or  return  shall  be  delivered  to  the  Commissioners  of  Stamps,  :it  the 
Stamp  Office  in  London,  who  shall  cause  the  same  to  be  filed  and  kept 
in  the  said  stamp  office,  and  an  entry  and  registry  thereof  to  be  made  in 
a  book  or  books,  to  be  there  kept  for  that  purpose,  by  some  person  or 
persons  to  be  appointed  by  the  said  commissioners  in  that  behalf,  and 
which  book  or  books  any  person  or  persons  shall  from  time  to  time  have 
liberty  to  search  and  inspect,  on  payment  of  the  sum  of  one  shilling  for 
every  search. 

"  Schedule  (A.) 

"Keturn  or  account  to  be  entered  at  the  Stamp  Office  in  London,  in 
pursuance  of  an  act  passed  in  the  seventh  year  of  the  reign  of  Kiug 
George  the  Fourth,  intituled  [here  insert  the  title  of  this  act,]  viz. 

»  Firm  or  name  of  the  banking  corporation  or  copartnership,  viz.  [set 
forth  the  firm  or  name]. 

"  Names  and  places  of  abode  of  all  the  partners  concerned  or  engaged 
in  such  corporation  or  copartnership,  viz.  [set  forth  all  the  names  and 
places  of  abode]. 

*<<  Names  and  places  of  the  bank  or  banks  established  by  such  p^gr-i 
corporation  or  copartnership,  viz.  [set  forth  all  the  names  and  L  J 
p>laces]. 

«  Names  and  descriptions  of  the  public  officers  of  the  said  banking  cor- 
poration or  copartnership,  viz.  [set  forth  all  the  names  and  descriptions]. 

«  Names  of  the  several  towns  and  places  where  the  bills  or  notes  of  the 
said  banking  corporation  or  copartnership,  are  to  be  issued  by  the  said 
corporation  or  copartnership,  or  their  agent  or  agents,  viz.  [set  forth  the 
names  of  all  the  towns  and  places]. 

"  A.   B.  of  ,  secretary  [or  other  officer,  describing  the 

office](r)  of  the  above  corporation  or  copartnership,  maketh  oath  and 
saith,  that  the  above  doth  contain  the  name,  style,  and  firm,  of  the  above 
corporation  or  copartnership,  and  the  names  and  places  of  the  abode  of 
the  several  members  thereof,  and  of  the  banks  established  by  the  said 
corporation  or  copartnership,  and  the  names,  titles,  and  descriptions  of 
the  public  officers  of  the  said  corporation  or  copartnership,  and  the  names 
of  the  towns  and  places  where  the  notes  of  the  said  corporation  or  copart- 
nership are  to  be  issued,  as  the  same  respectively  appear  in  the  books  of 
the  said  corporation  or  copartnership,  and  to  the  best  of  the  information, 
knowledge  and  belief  of  this  deponent. 

"  Sworn  before  me,  the  day  of  ,   at  ,   in   the 

county  of 

"  C.  D.,  justice  of  the  peace  in  and  for  the  said  county." 

A  return  of  an  account,  omitting  the  words,  justice  of  the  peace,  dr., 
&c,  was  held  to  be  receivable  in  evidence,  it  being   proved  that  C. 

(r)  "Tublic  officer"  sufficient,  at  least  without'pi'oof  that  he  held  a  specific  office. 
Armitage  v.  Haaier,  3  B.  &  Ad.  793. 


GRANT    OS    Till:    LAW    OF    BANKING. 

D.,  tin'  ]  aing  the  verification,  was,  in  fact,  a  justice  of  the 

■  (s) 

Thia  section  is  become  immaterial  in  one  respect,  viz.,  as  regards  that 
part  of  it  which  makes  compliance  with  it,  a  condition  precedent  to  the 
power  of  issuing  notes,  because,  since  l'.'th  July,  1844,  by  7  &  8  Vict. 

C.  32,  B.   10,  no  new  hank  ran  issue   notes;   but,  it  is   necessary  to  retain 

it  in  other  respects,  because,  as  to  them  it  is  still  the  law. 

The  words,  shall  sue  mnl  h>  sued,  as  hereinafter  "provided.,  refer  to 
•i  9,  the  effect  of  which  is  Btated  below.ft) 
r*-ir->n  Under  t Ii i -  section,  and  the  6th,  the  date  of  the  account,  *or 
L  "J  return,  is  the  material  thing;  that  i<,  to  fix;  who  are  members; 
and  what  is  meant,  is  the  day  when  the  officer  verifies  it,  and  can  be  no 
other  day. 

Offia  /•>-. — With  respect  to  the  officers  to  be  appointed  under  this 
section  it  i<  t<>  lie  remarked,  as  a  principle  of  the  law,  that  a  thing  being 
once  shown  to  exist,  it  is  presumed  to  continue  in  the  same  state,  until 
the  contrary  be  shown,  ami  therefore,  if  A.  1!.  he  shown  to  have  been 
appointed  u>  the  office,  (not  being  an  annual  office,)  he  is  presumed  to 
remain  officer,  in  the  absence  of  any  thing  to  show  any  change. («) 

The  intention  of  the  legislature,  to  be  gathered  from  this  section,  and 
other  provisions  of  the  statute,  appears  to  have  been,  that  there  should 
always,  during  the  continuance  of  the  concern,  be  a  public  officer  in 
existence,  capable  of  being  sued;  and,  in  all  probability,  the  hank  is 
compellable  by  law  to  appoint  another  immediately,  in  case  the  former 
officer  goes  out  of  the  jurisdiction,  &c.(x) 

Also,  it  has  been  held,  not  to  be  necessary  for  the  appointment  to 
have  been  made,  after  the  company  begin  to  carry  on  business;  it  may 
be  made,  and,  indeed,  ought  to  be  made,  before  they  issue  notes  at  all.(y) 

Evidence. — Under  this  section,  a  certified  copy  of  the  return  is  evi- 
dence of  the  facts  pertinently  stated  in  it ;  it  is  not  necessary  to  prove 
that  the  affidavit  verifying  it  was  made  by  the  public  registered  officer 
of  the  company. (z) 

r-*,pqi  *On  the  other  hand,  the  return  is  not  the  only  admissible  evi- 
L  -•  dence  of  these  facts,  for  they  may  be  proved  aliundeJa)  An 
annual  general  return  for  March,  L848,  has  been  held  admissible  in  evi- 
dence, in  support  of  an  issue  in  scire  facias,  whether  the  defendant  was 
a  member  on  -Mth  January,  lvls.(£A 

]{y  Bection  1,  as  has  been  seen,  the  return  is  made  evidence,  that  all 

B      aquel  v.  Woodford,  5  Q.  B.  310.  (t)  Infra,  p.  467. 

-  card  v.  Dunn,  12  M.  <v  W.  655.     A  return  made  to  the  stamp  office, 
.  A.  B.  to  be  officer  in  March,  :  leace  that  he  is  so  in  Novi 

-  I       .Hi  no!  the  only  evidence. 
Per  Curiam,  LO  If.  <*'\\'.  721. 

10  M.  A  W.  7-"-'. 
Bosanquet  w.  Woodford,  5  Q.  B.  310;   see  Steward  v.  Dunn.  12  M.  k  W. 
ee   L2  k  13  Vict,  c.  L,  b.   i.  and  7  .v  S  Vict.  c.  113,  ss.  19,  20.     if  it  pur- 
ports to  be  Bigned  bj  the  ':  cashier,"  it  will  Buffice.     Harvey  v.  Scott,  li  <,».  B.  92, 
L02. 

irdfl  \.  Buchanan,  3  B.  &  Ad.  788;  R.  v.  James,  7  Car.  ,v  P, 
v.  Carter,  i  Den.  I     I 
(//)  Bosanqnel  v.  Shortridge,  i  Exco 


COPARTNERSHIPS,    ETC.  331 

persons  named  therein,  as  members  of  such  corporation,  or  copartner- 
ship, were  such,  at  the  date  of  the  account,  or  return.  On  the  other 
hand,  however,  when  certain  proprietors  of  a  company,  were  sued  in 
scire  facias,  upon  a  judgment,  against  the  public  officer,  the  enumera- 
tion of  proprietors  in  such  a  return,  to  the  inland  revenue  office,  was  held 
not  receivable  in  evidence  against  the  plaintiff,  to  show  that  at  the  time 
they  were  not  proprietors,  (c) 

It  is  said  to  be  the  rule,  not  to  admit  the  return,  in  evidence,  unless 
it  has  been  filed  within  the  time  limited  by  the  statute. (d) 

The  fact  of  the  return  having  been  made,  &c,  is  not  a  condition 
precedent  to  the  public  officer's  right  to  sue  on  behalf  of  the  com- 
pany.^) 

Annual  Return. — The  continuance  of  the  returns  is  thus  provided  for, 
in  section  5  : — 

"  That  such  account  or  return  shall  be  made  out  by  the  secretary  or 
other  person,  being  one  of  the  public  officers  appointed  as  aforesaid,  and 
shall  be  verified  by  the  oath  of  such  secretary  or  other  public  officer,  taken 
before  any  justice  of  the  peace,(/)  and  which  oath  any  justice  of  the 
peace  is  hereby  authorized  and  empowered  to  administer,  and  that  such 
account  or  return  shall,  between  the  twenty-eighth  day  of  February  and 
the  twenty-fifth  day  of  March  in  every  year,  after  *such  corpo-  r*A(>A-. 
ration  or  copartnership  shall  be  formed,  be  in  like  manner  de-  L  J 
live  red  by  such  secretary  or  other  public  officer  as  aforesaid,  to  the  com- 
missioners of  stamps,  to  be  filed  and  kept  in  the  manner  and  for  the  pur- 
poses as  hereinbefore  mentioned." 

This  is  one  of  the  provisions  of  the  legislature,  which  it  is  usual  to  call 
directory  ;  this  kind  of  provision  occurs,  when  the  legislature,  enacting 
something  which  at  common  law  it  is  not  an  offence  to  violate,  omit  to 
annex  any  penalty,  or  other  made  by  which  their  intentions  may  be  en- 
forced, and  which,  therefore,  persons  seem  to  be  left  pretty  much  to  their 
choice,  whether  they  will  conform  to,  or  not ;  it  does  not  seem  to  be  ob- 
ligatory to  file  the  return  within  the  specified  period  of  the  year.(#) 

Then,  section  6  enacts,  that  certified  copies  of  such  returns  shall  be 
evidence.  (li\ 

It  is  manifest,  that  register  books,  in  which  the  names  of  members 
are  inscribed,  from  which  the  above  sworn  returns  are  to  be  copied,  can- 
not be  altered,  or  varied,  by  the  directors,  or  the  company,  especially 
not  post  litem  motam,  except  for  the  purpose  of  a  merely  verbal  correc- 
tion.^') 


(c)  Prescott  v.  Buffery,  1  C.  B.  41. 

(d)  Tayl.  Evid.  1364,  2nd  edit.,  citing  Prescott  v.  Buffery. 

(e)  Bonar  v.  Mitchell,  5  Exch.  415,  decided  on  similar  provisions  in  the  Scotch 
Banking  Act,  7  Geo.  IV.  c.  67. 

(/)  See  supra,  p.  461. 

(g)  See  per  Parke,  B.,  Steward  v.  Dunn,  12  M.  &  W.  663  ;  see  also  Bosanquet  v. 
Woodford,  5  Q.  B.  316,  319 ;  and  S.  P.  on  Scotch  Banking  Act,  7  Geo.  IV.  c.  67  ; 
Bonar  v.  Mitchell,  19  L.  J.,  Exch.  302. 

(h)  See  as  to  the  form  and  requisites  of  the  return,  Bosanquet  v.  Shortridge,  19 
L.  J.,  Exch.  221. 

(i)  Shortridge  v.  Bosanquet,  16  Bear.  96. 


GRANT    ON"    Till:    LAW    OF    BANK  IXC. 

The  board  of  inland  revenue  are  directed,  for  a  fee  often  shillings,  to 
certified  copies  of  the  returns,  .>r  accounts,  by  section  7. 

Another  Recount  of  the  names  of  persons  appointed  officers,  persons 
•  i  be  members,  of  persons  newly  becoming  members,  &c.,  &o.,  h 
mtA&Jrom  tim  to  time,  ion  requires,  by  section  8: — 

"That  the  secretary  or  other  officer  of  every  such  corporation  or  co- 
partnerehip  Bhall,  and  he  is  hereby  required,  from  time  to  time,  as  often 
easion  shall  render  it  aeoessary,  make  out  upon  oath,  in  manner  here- 
Lnbefore  directed,  and  cause  to  be  delivered  to  the  commissioners  of  stamps 
as  aforesaid,  a  further  account  or  return,  according  *to  the  form 
L  ij0]  contained  in  the  schedule  marked  (B.),(&)  of  the  name  or  names 
of  any  person  or  persons  who  shall  have  been  nominated  or  appointed  ■ 
new  or  additional  puhlic  officer  or  public  officers  of  such  corporation  or 
copartnership,  and  also  of  the  name  or  names  of  any  person  or  persons 
who  shall  have  ceased  to  be  members  of  such  corporation  or  copartner- 
ship, and  also  of  the  name  or  names  of  any  person  or  persons  who  shall 
have  become  a  member  or  members  of  such  corporation  or  copartnership, 
either  in  addition  to  or  in  the  place  or  stead  of  any  former  member  or 
members  thereof,  and  of  the  name  or  names  of  any  new  or  additional 
town  or  towns,  place  or  places,  where  such  bills  or  notes  are  or  are  in- 
tended to  be  issued,  and  where  the  same  are  to  be  made  payable;  and 
such  further  accounts  or  returns  shall  from  time  to  time  be  filed  and 
kept,  and  entered  and  registered  at  the  stamp  office  in  London,  in  like 
manner  as  is  hereinbefore  required  with  respect  to  the  original  or  annual 
account  or  return  hereinbefore  directed  to  be  made. (A 

"  Schedule  (B.) 

""Return  or  account,  to  be  entered  at  the  stamp  office  in  London,  on 
behalf  of,  [jmmiu  the  corporation  or  copartnership^  in  pursuance  of  an 
act  passed  in  the  seventh  year  of  the  reign  of  Kiug  Creorge  the  Fourth, 
intituled,  [insert  the  title  of  this  act,']  viz. 

<•  Names  of  any  and  every  new  or  additional  public  officer  of  the  said 
corporation  or  copartnership,  viz. 

•  A.  15.  in  the  room  of  C.  J).,  deceased,  or  removed,  [as  the  case  may 
be;  set  forth  every  name']. 

■  ■  Names  of  any  and  every  person  who  may  have  ceased  to  be  a  mem- 
h  r  of  such  corporation  or  copartnership,  viz.  [set  forth  every  name]. 

•  ■  Names  of  any  and  every  person  who  maj  have  become  a  new  mem- 
ber of  such  corporation  or  copartnership,  [set  forth  every  name~\. 

■  ■  Names  of  any  additional  towns  or  places  where  bills  or  notes  are  to 
be  issued,  and  where  the  same  are  to  be  made  payable. 

"A.  B.  of  oretary  for  other  officer]  of  the  above-named  cor- 

poration or  copartnership,  maketh  Oath  and  saith,  that  the  above  doth 
contain  the  nam"  and  place  of  abode  of  any  and  every  person  who  hath 
become  or  been  appointed  a  public  officer  of  the  above  corporation  or  co- 
partnership, and  also  the  name  and  place  of  abode  of  any  and  every  pcr- 

(!)  See  Shortridge  r.  Bosanquet,  10  Bear.  84. 


COPARTNERSHIPS,    ETC.  333 

son  who  hath  ceased  to  be  a  member  of  the  said  corporation  or  copart- 
nership, and  of  any  and  every  person  who  hath  become  a  member  of  the 
said  copartnership  since  the  registry  of  the  said  corporation  or  copartner- 
ship, on  the  day  of  last,  as  the  same  respectively  appear  on 
the  books  of  the  said  corporation  *or  copartnership,  and  to  the  r*lrr-> 
best  of  the  information,  knowledge,  and  belief  of  this  deponent.    L        'J 

"  Sworn  before  me,  day  of  ,  at  ,  in  the 

county  of 

"  C.  D.,  justice  of  the  peace  in  and  for 
the  said  county." 

But,  besides  the  returns  mentioned  in  this  section,  there  are  also  other 
returns  to  be  made,  under  7  &  8  Vict  c.  32,  s.  21,  which  enacts,(m)  that 
every  banker  shall,  on  1st  January,  in  each  year,  or  within  fifteen  days 
thereafter,  make  a  return  of  his  name,  &c,  and,  in  case  of  a  copartner- 
ship, of  the  name,  residence,  and  occupation  of  every  member,  with  other 
particulars.  (m\ 

It  appears  to  be  material,  to  observe  these  various  provisions  requiring 
these  returns ;  because,  although  they  are  not  enforced  by  penalties,  still, 
in  some  circumstances,  the  body  might  be  indicted  for  the  common  law 
misdemeanor,  or  nonfeasance  of  disobeying  a  statute. (u) 

But,  however  that  may  be,  obviously  it  is  most  important  for  mem- 
bers, or  shareholders,  of  these  bodies,  that  these  returns  should  be,  in 
all  respects,  accurately  made,  &c. ;  because,  upon  their  accuracy,  may 
often  depend  the  question  of  the  non-liability,  or  liability  of  a  share- 
holder, when  a  judgment  has  been  obtained  against  the  company. 

Thus,  if,  for  instance,  the  object  is  to  make  A.  liable  in  such  case,  by 
showing  that  he  was  a  member  at  the  time  the  contract  was  entered  into, 
and  by  the  returns,  previous  to  the  date  of  the  contract,  it  appears  that 
he  was  then  a  member,  and  there  are  returns  subsequent,  showing  the 
same,  and  no  return  of  his  retirement;  it  will  be  taken,  that  he  was  a 
member  at  the  time  of  the  contract,  unless  h*e  can  prove,  unanswerably, 
that  he  had  at  that  time  transferred  his  shares,  and  retired  from  the  co- 
partnership. (o\ 

*So,  the  omission  of  the  public  officer  to  make  any  return,  r*j.f  71 
may,  in  like  manner,  involve  members  in  losses,  which,  properly,  L  J 
they  are  not  liable  for.fp) 

Therefore,  it  is  very  important  for  shareholders  to  watch  these  returns 
with  vigilance. 

Actions,  Suits,  Prosecutions,  &c. — The  mode  of  suing,  petitioning  in 
bankruptcy,  prosecuting,  &c.  is  prescribed  in  section  9,  thus : — 

"  That  all  actions  and  suits,  and  also  all  petitions  to  found  any  com- 
mission of  bankruptcy  against  any  person  or  persons,  who  may  be  at  any 

(in)  See  the  terms  of  the  enactment,  supra,  p.  444. 

(n)  See  also  Burnes  v.  Pennell,  2  H.  Lds.  479. 

(0)  Harvey  v.  Scott,  11  Q.  B.  106.  In  Bosanquet  v.  Shortridge,  4  Exch.  699,  a 
return  made  after  the  commencement  of  the  action  was  admitted,  because  it  tended 
to  show  the  defendant  to  be  still  a  member ;  see  also  Prescott  v.  Buttery,  1  C.  B. 
41. 

(p)  Ex  parte  Prescott,  1  Mont  &  Ch.  611. 


G  R  ANT    ON    T  n  E    LAW    OF    B  A  H  E  I  N  G. 

time  indebted  to  any  such  copartnership,  carrying  on  business  andei  the 
provisions  of  this  act,  and  all  proceedings  at  law  or  in  equity  under  anj 
commission  of  bankruptcy,  ami  all  other  proceedings  at  law  or  in  equity 
commenced  or  instituted  I'm-  or  on  behalf  of  any  such  copartnership 
against  any  person  or  persons,  bodies  politic  or  corporate,  or  others, 
whether  members  of  such  copartnership  or  otherwise,  tor  recovering  any 
debts,  or  enforcing  any  claims  or  demands  due  to  such  copartnership,  ox 
for  anyother  matter  relating  to  the  concerns  of  such  copartnership,  shall 
ami  lawfully  may,  from  ami  after  (26th  May,  1826,)  be  commenced  or 
instituted,  and  prosecuted  in  the  name  of  any  one  of  the  public  officers 
nominated  as  aforesaid,  for  the  time  being  of  Buch  copartnership,  as  the 
nominal  plaintiff  or  petitioner  fur  and  on  behalf  of  such  copartnership ; 
and  that  all  actions  or  suits  or  proceedings  at  law  or  in  equity,  to  be  com- 
menced or  instituted  by  any  person  or  persons,  bodies  politic  or  corporate, 
or  others,  whether  members  of  such  copartnership  or  otherwise,  against 
Sttch  copartnership,  shall  and  lawfully  may  be  commenced,  instituted 
and  prosecuted  against  any  one  or  more  of  the  public  officers  nominated 
as  aforesaid,  for  the  time  being  of  such  copartnership,  as  the  nominal 
defendant  for  and  on  behalf  of  such  copartnership  : 

••And  that  all  indictments,  informations  and  prosecutions,  by  or  on 
behalf  of  such  copartnership,  for  any  stealing  or  embezzlement  of  any 
money,  goods,  effects,  bills,  notes,  securities  or  other  property  of  or 
belonging  to  BUch  copartnership,  or  for  any  fraud,  forgery,  crime  or 
offence  committed  against  or  with  intent  to  injure  or  defraud  such  co- 
partnership, shall,  and  lawfully  may  be  had,  preferred  and  carried  on. 
in  the  name  of  one  of  the  public  officers  nominated  as  aforesaid,  for  the 
time  being  ofsuch  copartnership: 

••  And  that  in  all  indictments  and  informations  to  be  had  or  preferred 
by  or  on  behalf  of  such  copartnership,  against  any  person  or  persons 
whomsoever,  notwithstanding  Buch  person  or  persons,  may  happen  to  be 
a  member  or  members  of  SUth  copartnership,  it  shall  be  lawful  and  suffi- 
r*j.r<<n  cient  to  state  the  money,  goods,  effects,  bills,  note-,  ^securities 
L  J  or  other  property  ofsuch  copartnership,  to  lie  the  money,  goods, 
i  ff<  cts,  bill-,  nob  -.  -'  curities  or  other  property  of  any  one  of  the  public- 
officers  nominated  as  aforesaid  for  the  time  being  ofsuch  copartnership: 

••  And  that  any  forgery,  fraud,  crime,  or  other  offence  committed  against 
or  with  intent  to  injure  or  defraud  any  such  copartnership,  shall  and 
lawfully  may  in  such  indictment  or  indictment-,  notwithstanding  as 
aforesaid,  be  laid  or  Btated  to  have  been  committed  againsl  or  with  intent 
to  injure  or  defraud  any  one  of  the  public  officers  nominated  as  aforesaid 
lor  the  time  being  of  such  copartnership j  ami  any  offender  or  offenders 

may  thereupon    be   lawfully  convicted  for  any  BUCh  forgery,  fraud,  ciime 

or  offence;  ami  that  in  all  other  allegation.-,  indictments,  informations  or 
other  proceedings  of  any  kind  whatsoever,  in  which  it  otherwise  might  or 
would  have  been  necessary  to  state  the  name-  of  the  persons  composing 

such  Copartnership,  it  shall  and  may  be  lawful  and  sufficient  to  state  the 

name  of  one  of  the  public  officers  nominated  as  aforesaid  for  the  time 
being  of  such  copartnership  : 

•■  And  the  death,  resignation,  removal,  or  any  act  of  such  public  officer, 


COPARTNERSHIPS,    ETC.  :,:;,") 

shall  not  abate  or  prejudice  any  such  action,  suit,  indictment,  informa- 
tion, prosecution,  or  other  proceeding  commenced  against  or  by  or  on 
behalf  of  such  copartnership,  but  the  same  be  continued,  prosecuted  and 
carried  on  in  the  name  of  any  other  of  the  public  officers  of  such  copart- 
nership for  the  time  being." 

This  section  has  been  considered  to  empower  a  company  to  sue  out  a 
fiat  in  bankruptcy,  by  their  public  officer,  against  a  shareholder,  upon  a 
debt  due  from  him  to  the  company,  in  respect  of  an  unsettled  account, 
precluding  the  debtor's  right  of  set-off;^)  and  at  present  this  certainly 
is  so,  at  any  rate  by  the  combined  operation  of  7  Geo.  IV.  c.  46,  and 
1  &  2  Vict.  c.  96. 

In  a  case  in  bankruptcy/r)  as  well  as  in  one  at  law,(.s)  a  strong  doubt 
had  been  expressed  whether  the  7  Geo.  IV.  c.  46,  enabled  the  company 
to  sue  at  law  a  member  for  a  debt.  But  this  defect,  or  supposed  defect, 
has  since  been  remedied  by  stat.  1  &  2  Vict.  c.  96,  and  the  courts  have 
considered  the  words  "shall  and  lawfully  may,"  in  this  section,  to  be 
obligatory.  (t\ 

*The  public  officer  is  authorized  to  petition  in  bankruptcy,  by  p^po-i 
12  &  13  Vict.  c.  106,  s.  92.  L        J 

Where  a  member  of  a  banking  copartnership  kept  an  account  with 
them  as  his  bankers,  and  became  bankrupt,  indebted  to  the  bank  on  the 
said  account,  the  company  being  largely  indebted  to  other  persons,  they 
have  a  right  of  proof  against  the  bankrupt  in  respect  of  the  balance  due 
to  them  on  his  account. («) 

Public  Officer. — It  has  been  stated  to  be  desirable  that  the  public 
officer,  in  suing,  should  state  himself  to  be  so ;  but  this  is  not  always 
necessary.  Thus,  where  the  plaintiff  sued  as  payee  of  a  promissory  note, 
made  payable,  on  demand,  in  the  body  of  it,  «  to  the  manager  of  the 
Provincial  Bank  of  ngland,"  but  the  plaintiff  did  not  sue  as  public 
officer,  it  was  held  that  upon  proof  that  he  was  in  fact  the  manager  of 
the  bank  named,  and  of  demand  on  the  bank,  the  plaintiff  was  entitled 
to  recover;  and  that  in  the  absence  of  a  plea,  that  the  bank  was  estab- 
lished under  stat.  7  Geo.  IV.  c.  46,  and  that  the  plaintiff  was  not  the 
public  officer  of  it,  it  was  not  necessary  for  the  plaintiff  to  show  that  he 
was  the  public  officer,  nor  admissible  for  the  defendant  to  show  that  he 
was  not  so.(v) 

Both  the  public  officers  must  not  sue  at  once.  It  will  be  observed, 
that  by  the  9th  sect,  of  7  Geo.  IV.  c.  46,  actions,  &c,  "shall  and  law- 
fully may  be  commenced,  &c,  in  the  name  of  any  one  of  the  public 
officers,  &c,  for  the  time  being  of  such  copartnership  as  the  nominal 
plaintiff,"  &e. ;  if,  therefore,  both  sue  together,  the  court  will  allow  an 
amendment,  on  payment  of  costs,  to  be  made,  by  striking  out  the  name 
of  one.(x) 

(q)  Ex  parte  Hall,  Mont.  &  Ch.  365,  481.  (r)  Id.  365. 

(s)  Hughes  v.  Thorpe,  5  M.  &  W.  656. 

(t)  5  Exch.  61,  66;  see  1  &  2  Vict.  c.  96,  s.  1. 

(u)  Ex  parte  Davidson,  2  M.  D.  &  De  G.  368. 

(v)  Robertson  v.  Steward,  1  M.  &  Gra.  511. 

(x)  Holmes  v.  Binney,  6  Scott,  346.     As  to  suing  both,  16  M.  &  W.  669. 

February,  1857.— 23 


GRANT  OX  THE  LAW  OF  BANKING. 

*It  appears  to  be  evidently  the  intention  of  the  legislature  thai 
-I  the  company  should  always  have  a  public  officer  in  existence, 
may  roe  and  be  sued  j  and  if  there  be  no  public  officer,  the  company 
impellable,  probably  by  mandamus,  to  appoint  ouc,(^)  and,  more- 
.  it  is  clearly  settled   that   the  common   law  remedy  against  the 
partners,  is  wholly  taken  away;  that  "shall  and  lawfully  may"  are  com- 
pulsory and  exclusive  words  as  used  in  this  act,  the  remedies  not  being 
cumulative,  but  in  substitution  for   the  common  law  remedy  against 
partnersJz)   and  therefore,  the  common    law  remedy  does  not   revive 
-i  a  former  partner  after  the  expiration  of  the  three  years  from  his 
ring  to  be  a  partner,  (a) 

In  an  action  by  a  public  officer,  it  is  desirable,  though  not  essential, 
to  allege,  in  the  declaration,  that  the  plaintiff,  at  the  commencement  of 
suit,(6)  had  been  named  and  duly  appointed  one  of  the  public  officers 
i  f  the  company;  but  it  is  not  necessary  to  state  that  he  is  a  member  of 
the  company,  or  that  he  has  been  duly  registered,^)  or  that  he  has  been 
duly  named  and  appointed  as  the  nominal  plaintiff  on  behalf  of  the  co- 
partnership.^) It  may  be  stated  also,  that  the  copartnership  was  then 
carrying  on  business  ;  it  is  objectionable  to  state  the  copartnership  to  be 
united  for  lit-  purpose  of  carrying  on  business  without  inore,(V)  although 
Buch  statement  would  not  be  bad  in  arrest  of  judgment.(/) 

There  seems  to  be  no  longer  any  reason  to  doubt  but  that  *a 
L  '  3  banking  copartnership,  since  1  &  2  Yict.  c.  96,  s.  1,  may  sue 
i.  i  the  price  of  shares  by  their  public  officer. (/<) 

They  may  also  sue  members  jointly  with  strangers,(<')  by  their  public 
officer. 

Notwithstanding  the  change  of  name  of  a  copartnership,  and  the  acces- 
sion of  fresh  proprietors  to  it,  the  increase  of  their  capital,  and  the  addi- 
tion of  fresh  directors,  the  public  officer  of  the  new  copartnership  may 
sue  as  a  public  officer,  on  a  guarantee  given  to  the  company  before  the 
alb  ration. (/)  it  not  appearing  to  the  court,  from  the  pleadings  or  the 
;il  case  reserved,  that  the  constitution  of  the  bank  was, different  from 
thai  with  which  the  contract  was  made.(t)  In  no  case  can  a  company  of 
this  kind  sue  otherwise  than  by  their  public  officer.(?n) 

Also  a  public  officer  may  sue  after  a  banking  copartnership  has  stopped 
payment,  keeping  the  establishment  open  only  for  the  object  of  winding 
uj>  the  concern. (><) 

(y)  Per  Cur.,  10  M.  £  W.  721  ;  To<U  v.  Wright,  1G  L.  J.,  Q.  B.  311  ;  see  6  Exeh. 

(z)  Steward  v.  Greaves,  10  M.  <v  W.  Til. 

Barker  v.  Bnttress,  7  Beav.  134;  as  to  being  a  contributory,  Ex  parte  Ilaw- 
•  ae,  i  Mac.  ^  <; 

(in  Bsdaile  v.  Maclean,  l.">  M.  k  W.  277:  M'Intyre  v.  Miller,  13  M.  &  W.  72:.. 
(.  |  Spiller  v.  Johnson,  <;  M.  ct  W.  570.        (</)  Christie  v.  Peart,  7  M.  A  W.49.1. 
Fletcher  v.  Orosbie,  9  M.  .v  W.  2:. 2. 

•..  Bower,  1  M.  .v  Gra,  <;•_'.;;  s.  C,  2  DowL  X.  8.  115. 
(h)  This  was  assumed  in  Davidson  v.  Bower. 

Manners  r.  Rowley,  10  Bim.  171.  (/.-)  Wilson  v.  Craven,  8  M.  k  W.  584. 

De  G.  &  Bm.  733;  12  Bast,  100, 
{in)  Chapman  v.  Milvain, 6  Bxch.  61. 

l':.  I    oper,  11  M.  «v  W.  778.     In  an  action  by  public  officer  ot  » 


COPARTNERSHIPS,    ETC.  337 

A  banking  copartnership  having  become  insolvent,  and  ceased  to  carry 
on  business,  the  public  officer  instituted  a  suit  in  equity,  charging  some 
of  the  directors  with  losses,  during  the  time  when  the  business  was  carry- 
ing on,  by  reason  of  unauthorized  speculations  in  shipping,  &c,  and  of 
a  fraudulent  transaction  by  a  deed  of  arrangement  with  a  debtor  to  the 
company,  praying  relief  in  respect  of  all  these  matters,  and  to  have  tbe 
deed  set  aside.  -  The  suit  was  considered  to  have  been  properly  instituted 
by  the  public  officer,  although  the  company  had  ceased  to  carry  rH. <70-i 
*on  business ;  that  directors  and  trustees,  not  charged  with  im-  L  ""J 
proper  transactions  or  fraud,  need  not  be  made  parties  to  the  suit ;  but 
the  manager,  who,  it  appeared,  was  mixed  up  in  these  transactions, 
ought  to  be  made  a  party ;  and  that  though  there  were  several  distinct 
transactions,  they  were  properly  comprised  in  a  single  suit.(0) 

So,  although  a  warrant  of  attorney  have  been  given  to  trustees  of  the 
copartnership  to  secure  a  debt  due  to  the  bank,  the  judgment  thereon 
can  only  be  entered  up  in  the  name  of  the  public  officer. (jj) 

So  the  public  officer  is  to  sue  on  a  breach  of  covenant  with  trustees  of 
the  copartnership,  to  pay  calls,(<2)  and  in  general,  is  the  only  proper  party 
to  sue  on  all  covenants  in  the  deed  of  settlement ;  although  those  cove- 
nants be  made  with  trustees,  (r)  The  statute  7  Geo.  IV.  c.  46,  it  is  to 
be  observed,  does  not  expressly  authorize  the  entering  into  a  covenant 
or  bond  by  the  public  officer  on  behalf  of  the  company,  (s) 

So  the  company  would  not  be  bound  by  a  judgment  in  an  action  by  a 
person  not  at  the  time  their  public  officer;  and  hence,  if  a  defendant,  in 
an  action  purporting  to  be  brought  by  the  plaintiff,  as  public  officer  of  a 
company,  traverses  the  appointment  of  the  plaintiff  as  public  officer,  and 
has  a  verdict  on  that  issue,  it  is  a  full  defence. (?) 

Liabilities  of  Public  Officer. — The  indemnity  given  by  the  statute  to 
the  public  officer,  as  regards  actions,  judgments,  &c,  against  him,  has 
already  been  pointed  out.(«) 

With  respect  to  the  production,  for  purposes  of  evidence,  by  the  public 
officer,  of  papers  and  documents  in  his  custody  ^belonging  to  the  r#_i -o-i 
company,  his  responsibility  is  very  large.  The  legislature,  it  L  J 
must  be  remembered,  has  expressly  enacted,  that  every  decree  or  order 
of  a  court  of  equity,  against  any  public  officer  of  the  company,  shall  have 
the  same  effect  as  if  all  the  members  were  parties  to  the  suit. 

Therefore,  the  public  officer,  in  case  of  any  proper  application  for  the 
discovery  of  matters  contained  in  the  books,  documents,  &c,  of  the  com- 
pany, cannot  allege  that  the  company  is  dissolved,  and  since  that  event 
he  had  not  in  his  individual  possession  any  books,  &c,  of  the  company, 

banking  copartnership,  plea  denying  that  at  the  commencement  of  the  suit  the  co- 
partnership were  carrying  on  the  business  of  bankers,  allowed  with  pleas  of  non 
assumpsit  and  accord  and  satisfaction,  Roe  v.  Fuller,  21  L.  J.,  Exch.  104 ;  S.  C,  7 
Exch.  220;  see  11  M.  &  W.  63  ;  5  id.  656;  10  id.  711. 

(o)  Harrison  v.  Brown,  5  De  G.  &  S.  733,  cor.  Parker,  V.  C. 

(p)  Bell  v.  Fisk,  12  C.  B.  493.  (?)  Wills  v.  Sutherland,  4  Exch.  211. 

(r)   Chapman  v.  Milvain,  5  Exch.  61  ;  see  12  C.  B.  498. 

\s)  Per  Jervis,  C.  J.,  12  C.  B.  497. 

\t)  Barnewall  v.  Sutherland,  19  L.  J.,  C.  B.  292. 

(w)  See  supra,  p.  467. 


Q BANT    ON    THE    LAW    OF    BANKING. 

but  that  he  believes  some  of  them  were  in  the  possession  of  the  din 
uid  others  of  the  solicitor  of  the  company;  and  the  reason  he  cannot  '1" 
ao  is  the  above.  The  public  officer  Btands  for  the  whole  body:  if  the 
whole  body  had  been  defendants,  they  could  not  have  refused  to  produce, 
in  a  suit  by  a  shareholder  charging  insolvency,  and  prayings  dissolution 
of  the  company,  and  an  account,  &c.,  so  neither  can  the  public  officer. 

A  covenant  in  the  deed  of  settlement,  to  the  effect  that  no  shareholder. 
not  being  a  director,  &c.,  &o.,  shall  be  entitled  to  inspect  any  deeds, 

1 ks,  \c  of  the  company.  &0.,  does  not  vary  the  ease,  or  deprive  die 

books  of  their  character  of  evidence,  as  between  the  shareholder  and  the 
company,  or  oust  the  court  of  its  power  to  enforce  the  production  of  such 

evidence.)./  ) 

In  fact,  in  many  respect-,  for  the  purpose  of  supporting  and  maintain- 
ing proceedings  on  behalf  of  the  company,  and  enforcing  their  claim-. 
recovering  debts,  &C.,  the  public  officer  is  nearly  in  the  nature  of  a  cor- 
porate body, — an  abstract  entity  having  a  continuous  duration,  indepen- 
dent of  any  change  that  may  be  made  in  the  living  being,  or  individual, 
who  fills  the  office.  This  appears  to  be  the  meaning  of  the  statute,  in 
providing  that  the  public  officers,  for  the  time  being,  notwithstanding 
death,  removal,  &c.,  may  take  proceedings,  and  commence,  prosecute, 
r*_i-n  and  continue  suits,  *&o.  Thus,  a  cognovit  actionem,  given  to 
L  J  A.  B.,  as  public  officer  of  a  copartnership,  was  considered  to  be 
sufficient,  after  his  removal,  to  authorize  a  succeeding  public  officer  to 
enter  np  judgment  in  his  own  nauie.fy)  To  enter  it  up  in  the  name  of 
the  officer,  in  whose  time  the  cognovit  was  given,  would  be  erroneous. (z) 

Again,  when  an  action  is  brought  against  the  public  officer  of  a 
copartnership,  as  such,  he  is  not  allowed  to  plead  that  he  has  become 
bankrupt  ;  for  he  is  a  mere  parliamentary  defendant  ;  he  represents  the 
interests,  perhaps,  of  several  hundred  persons,  and,  if  he  were  to  be 
allowed  to  plead  such  a  plea,  of  a  matter  merely  personal  to  himself,  in 
bar  of  the  action,  he  would  confer  the  benefit  of  that  defence  on  all  those 
whom  he  represents  as  defendant  but  as  a  mere  name,  and  such  an  effect, 
of  setting  up  the  public  officer  to  be  sued  on  behalf  of  the  body,  it  is 
manifest  the  legislature  could  not  have  contemplated.  In  such  a  case, 
however,  the  plaintiff  would  be  prevented  from  taking  out  execution 
inst  the  defendant,  or  his  individual  estate. (a) 

Accordingly,  it  has  been  held,  where  a  deed  of  settlement  provides, 
that  if  any  of  the  public  officer-  became  bankrupt  he  should  become  dis- 

qualified,  and  bis  office  should  become  vacant,  that  the  proper  construc- 
tion is,  not  that  the  person  should  cease  to  be  public  officer  absolutely, 
but  onlj  at  the  election  of  the  company. (A)  If  bankruptcy,  per  se,  dis- 
qualified, the  company  COuld  have  had  no  .lection. 

So,  a  person  sued,  as  public  officer  of  a  copartnership,  will  not  be 

(r)  Ball  v.  Council.  ::  Y.  A  Coll.  101,  Bxch. 

I         •  •  mi  to  be  'In-  effect  of  the  judgmenl  in  Webb  v.  Taylor,  1  Dowl.  k 
Todd  v.  Wright,  l<;  L.  J..  Q.  B.  311. 
D.  .v  l..  68?  :  Probln  r.  Locock,  l  Dowl.  N.  8.  197. 
.  Dunn,  1 1  M.  .v  W.  63  D e  G.  &  B.  733. 

Bteward  v.  Dunn,  12  M.  k  W.  8 


COPARTNERSHIPS,    ETC.  339 

allowed  to  plead  that  he  is  not  public  officer,  together  with  other  pleas, 
going  to  the  merits  of  the  action.  He  may  rely  on  that  plea  as  his  sole 
defence,  if  he  chooses;  but,  as  the  company  are  the  true  defendants, 
they  must  rely  on  such  defence  as  they  have  to  the  substance  of  the 
action  •  *they  cannot  be  allowed  to  turn  the  plaintiff  round  on  r^i7r-i 
so  mere  a  matter  of  form  as  whether  the  defendant  was  public  "-  J 
officer  at  the  commencement  of  the  suit.(c) 

The  above  sect.  9,  of  the  stat.  7  Geo.  IV.  c.  46,  has  been  said  to 
show  very  clearly  the  intention  of  the  legislature,  that  no  action  should 
be  brought  except  against  the  public  officer  ;(e?)  it  would  seem,  there- 
fore, to  follow,  that  the  company  are  bound  always  to  have  a  public 
officer  who  is  capable  of  being  sued. 

Where,  however,  the  litigation  is  by  one  or  more  members  of  the  co- 
partnership, as  such,  and  the  other  members,  as  such,  the  public  officer  is 
improperly  made  a  party  to  the  suit  as  defendant;  for,  where  one  member 
charges  fraud  against  the  other  members  with  which  the  whole  coinpany 
was  not  chargeable,  it  is  inconsistent  with  the  character  of  the  public 
officer's  function,  and  the  object  of  the  legislature  in  instituting  it,  to 
make  him  a  defendant,  since  he  only  represents  the  company,  and  here 
the  company  are  not  called  upon  to  answer  as  such.  It  is  to  be  observed, 
however,  that  this  suit  was  brought  after  the  company  was  dissolved, 
and  after  the  debts  were  paid  off,  and,  practically,  the  banking  business 
had  terminated. (e)  But  it  does  not  appear,  that  the  absence  of  these 
facts  would  have  made  any  difference  in  the  decision. 

The  stat.  7  Geo.  IV.  c.  46,  relates  in  this  respect,  to  banking  copart- 
nerships of  more  than  six  members,  carrying  on  business  beyond  sixty-five 
miles  from  London:  the  stat.  7  &  8  Vict.  c.  113,  s.  47,  extends  the 
power  of  their  suing  and  being  sued,  to  banking  copartnerships  of 
more  than  six  members,  carrying  on  business  within  that  distance  of 
London. 

*By  the  stat.  3  &  4  Vict.  c.  Ill,  s.  2,  in  all  cases  of  banking  r*476-i 
copartnerships,  under  7  Geo.  IV.  c.  46,  and  also  those  under  L 
3  &  4  "Will.  IV.  c.  98,  the  members  are  liable  for  stealing  the  goods  of 
the  company,  or  in  respect  of  fraud,  forgery,  &c.,  against  the  company, 
to  criminal  proceedings,  "  in  the  name  of  any  of  the  officers,  for  the  time 
being,  of  any  such  copartnership,  in  whose  name  any  action  or  suit, 
might  be  lawfully  brought  against  any  member,"  for  every  such 
fraud',  &c.(/) 

Death  of  Public  Officer.— John  Taylor,  as  public  officer  of  a  banking 
copartnership,  commences  an  action  in  which  issue  is  joined;  after 
which,  and  before  trial,  he  dies ;  and  the  Nisi  Prius  record,  and  all  the 
proceedings,  were  made  up  and  taken,  as  though  Taylor  were  still  alive, 
and  no  notice  was  taken  on  plea  roll  of  the  death  of  Taylor,  or  of  the 

(c)  Needham  v.  Law,  11  M.  &  W.  400.  Since  1  &  2  Vict.  c.  9G,  a  banking  co- 
partnership is  so  far  in  the  nature  of  a  corporation  that  notice  to  one  member  is  not 
notice  to  the  body;  see  12  M.  &  W.  664  ;  3  C.  B.  25. 

Id)  Davison  v.  Farmer,  6  Exch.  242. 

(e)  Seddon  v.  Connell,  10  Sim.  58,  79. 

(/)  Made  perpetual,  5  &  6  Vict.  c.  85. 


CHANT  OS  THE  LAW  OF  BANKING. 

appointment  of  his  suooessor;    but,  after   the  Nisi  Prius  record 
passed,  bo  made  up,  a  memorandum  was  entered  on  it  of  the  death,  and 
of  the  oew  appointment,  not  by  way  of  suggestion,  nor  followed  by  oon- 
:,  of  the  defendant,  or  a  nx*  nt  di  din  .     The  cause-  was  then  entered 

for  trial  in  the  name  of  the  uew  public  officer  as  plaintiff,  and  was  tried 
by  a  jury,  returned  under  a  venire,  awarded  between  Taylor  and  the 
defendants.  Defendants  appeared  under  protest,  and  plaintiff  bad  a 
verdict;  but  it  was  held,  that  the  entry  on  the  Nisi  Prius  record  was 
irregular,  and  did  not  authorize  the  trial  of  the  cause  in  the  name  of  the 
new  public  officer. (</) 

This  seems  to  turn  on  the  technical  ground  of  the  maintenance  of  the 
ancient  forms;  it  being  a  rule,  that,  except  where  a  statute  expressly 
dispenses  with  it,  in  all  cases  where  there  is  a  change  of  parties  during 
the  progress  of  the  cause  before  trial,  that  change  is  required  to  appear 

on  *the  record,  by  way  of  suggestion  to  the  court,  and   that 

L  '  '  J  where  such  facts  are  not  traversable,  they  should  be  followed  by 
a  confession,  or  a  nient  tit  dire. 

The  proper  course  seems  to  be,  to  move  for  a  rule  nisi,  to  enter  a 
suggestion,  with  a  nient  dedire.(h\ 

In  a  ease,  the  public  officer  had  died  after  judgment,  and,  after  the 
issuing  of  a  writ  of  ca.  sa.,  but  before  its  execution,  this  does  not  cause 
the  action,  or  the  proceedings  consequent  on  it,  to  abate,  and,  therefore, 
the  defendant  may  be  taken  in  execution. (/) 

Banks  within  Sixty-Jive  Miles  of  London. — "With  respect  to  powers 
of  suing,  and  being  sued,  it  is  material  to  attend  to  the  provisions  of  the 
statute  7  &  v  Vict.  c.  113,  by  which  every  company  of  bankers,  of  mure 
than  six  persons,  established  on  6th  May,  1844,  for  carrying  on  business 
within  sixty-fivt  miles  from  London,  and  not  falling  within  7  &  8  Vict. 
0.  1  13,  is  given  the  same  powers  of  suing,  and  being  sued,  in  the  name 
of  the  public  officer,  &c.,  as  a  copartnership,  under  7  Geo.  IV.  c.  I'>. 
by  that  act,(/»)  which  relates  to  partnerships  carrying  on  business 
beyond  sixty-five  milts  from  London  ;  provided  that  the  first-mentioned 
companies  make  out  and  deliver,  from  time  to  time,  to  the  Board  of 
Inland  Revenue,  the  returns  required  by  7  Geo.  IV.  c.  4G,  all  the  pro- 
visions  whereof,  respecting  returns,  are  to  apply  in  the  case  of  such 
hankers  also. (A 

Own  Member*. — These  bodies,  as  has  been  observed,  may  always  sue 
their  own  members;  and  it  i-  enacted :(m) — 

"J'/ttts. — Thai  in  case  the    merits   of  any  demand   by  or   against   any 

such  copartnership  shall  have  been  determined  in  any  action  or  suit  by 
or  againsl  any  such  public  officer,  the  proceedings  in  such  action  or 
.  n  *suit  maybe  pleaded  in  bar  id'  any  other  action  or  suit  by  or 
'  '  J  against  the  publia  officer  of  the  sane'  copartnership  for  the  same 
demand." 

(;)  BarnewaU  v.  Bntheriand,  L9  L.  J.,  0.  B.  290 :  B.  C,  l  t  Jar.  720,  per  Cur. 
Patei  -"ii  v.  ironside,  l  t  Jur.  7  j _• .  a.,  per  Cur,  C.  B. 

Todd  v.  Wright,  16  L.  J.,  Q.  B.  811,  cor.  Erie,  J. ;   Ellis  v.  Griffiths,  16  M.  k 
W.  106. 

3ei      .         |     154,8.1.  (/)  7  &  8  Vict.  c.  113,  s.  47. 

\m)   L  42  A  ict.  c.  96,  s.  2. 


COPARTNERSHIPS,    ETC.  341 

Set-off. — Then  follows  an  important  and  remarkable  enactment,  resj 
ing  set-off.  (») 

"That  no  claim  or  demand  which  any  member  of  any  such  copartm  r- 
ship  may  have  in  respect  of  his  share  of  the  capital  or  joint  stock  t  li. 
or  of  any  dividends,  interest,  profits  or  bonus,  payable  or  apportionable 
in  respect  of  such  share,  shall  be  capable  of  being  set  off,  either  at  law 
or  in  equity,  against  any  demand  which  such  copartnership  may  have 
against  such  member  on  account  of  any  other  matter  or  thing  whatso- 
ever; but  all  proceedings  in  respect  of  such  other  matter  or  thing  may 
be  carried  on  as  if  no  claim  or  demand  existed  in  respect  of  such  capital 
or  joint  stock,  or  of  any  dividends,  interest,  profits,  or  bonus,  payable  or 
apportionable  in  respect  thereof." 

Then,  by  5  &  6  Vict.  c.  85,  these  enactments  were  made  perpetual. 

The  result  is,  that  the  company  can  only  sue,  in  any  case,  including 
a  suit  or  action  against  a  member  for  a  debt,  or  to  enforce  any  claim  or 
demand,  by  their  public  officer,(o)  and  the  public  officer  is  the  proper 
party  to  sue  for  calls,  though  he  himself  is  not  a  party  to  the  deed  in 
which  the  defendant  covenanted  to  pay  the  calls. (o) 

Effect  of  Judgments,  &c. — Then  provision  is  made,  that  decrees  in 
equity,  made  against  the  public  officer,  shall  take  effect  against  the  com- 
pany,^) and  so  of  judgments  in  actions  at  law.(g') 

If  a  judgment  be  recovered  against  the  public  officer  of  a  banking 
copartnership,  and  it  be  desired  to  charge  the  real  estate  of  a  member  of 
the  copartnership  at  the  date  of  the  judgment,  the  Court  of  Common 
Pleas  has  no  jurisdiction  over  the  senior  master,  to  order  him  to  receive 
the  memorandum,  in  order  to  register  the  judgment,  pursuant  to  1  &  2 
Vict.  c.  110,  s.  19,  and  3  &  4  Vict.  c.  82,  s.  2;  but  the 
^master  will  probably  receive  such  memorandum,  and  register 
the  judgment  in  ordinary  cases.     The  question  is  for  his  discretion.  (/•) 

If  the  property  consist  of  land,  then,  although  an  elegit  has  been  issued 
against  it,  still,  if  the  land  be  found  insufficient  in  value  to  satisfy  the 
judgment  debt,  the  creditor  may  proceed  against  the  members. (s)- 

Judgment  was  entered  up  (under  a  power  of  attorney,)  by  a  banking 
copartnership,  against  the  public  officer  of  another  banking  copartner- 
ship, and  a  sci.  fa.  issued,  to  obtain  execution  against  several  members 
of  the  latter.  One  of  these  obtained  a  rule  nisi,  for  setting  aside  the 
judgment  and  warrant  of  attorney,  and  permitting  certain  named  mem- 
bers to  defend  the  action.  The  court,  thereupon,  ordered  an  issue  to  be 
tried  upon  the  question,  inter  alia,  whether  the  members,  or  shareholders 
of  the  latter  company,  were  indebted  to  the  former,  in  any,  and  what 
sum  :  held,  that  on  such  issue,  the  defendants  could  not  object,  that  some 
parties  on  the  record  were  members  of  both  companies ;  for,  though  it  be 
true,  that  in  an  action,  the  same  person  cannot  be  plaintiff  and  defen- 
dant,^) this  rule  does  not  apply  to  an  issue,  directed  for  the  purpose  of 

(n)  1  <fc  2  Vict.  c.  96,  s.  4.  (o)  Chapman  v.  Milvain,  5  Exch.  61. 

(p)   1  Geo.  IV.  e.  46,  s.  11.  (?)  Id.  s.  12. 

(r)  Ex  parte  Ness,  5  D.  &  L.  339;  S.  C.,  5  C.  B.  155;  2  &  3  Vict.  c.  11,  s.  3. 

(s)  Reg.  v.  Derbyshire,  &c,  Railway  Company,  23  L.  J.,  Q.  B.  333. 

(t)  Bosanquet  v.  Wray,  6  Taunt.  587. 


[*479] 


342         GRANT  ON  THE  LAW  OF  BANKING. 

taining  certain  facts,  with  a  view  to  ulterior  proceedings,  for  then- 
is  no  reason  why,  in  such  ease,  the  court  should  not,  for  that  special 
t.  v;ut  the  legal  position  and  rights  of  the  parties,  as  iu  issues, 
directed  by  the  Court  of  Chanoery,  is  constantly  done.(«) 

Execution. — The  next  provision  is  very  material,  as  giving  the  mode 
dicing  a  judgment  against  the  company,  in  case  there  are  no  part- 
is rahip  assets  to  meet  it;  it  lias  led  to  many  questions;  and  the  courts 
..  have  had  great  trouble  in  ^putting  an  interpretation  on  it.     The 
L         J  enaetmeiitj./)  is  so  important,  to  he  fully  known,  that  it  is  ueces- 
Bary  to  state  it  at  length  : — 

"That  execution  upon  any  judgment  in  any  action  obtained  against 
any  public  officer  for  the  time  being  of  any  such  corporation  or  copart- 
nership, carrying  on  the  business  of  hanking  under  the  provisions  of  this 
act,  whether  as  plaintiff  or  defendant,  maybe  issued  against  any  member 
or  members,  for  tht  time  being,  of  such  corporation  or  copartnership; 
and  that  in  ease  any  such  execution  against  any  member  or  members  fow 
the  ti in*  hi  inij  of  any  such  corporation  or  copartnership,  shall  be  inef- 
fectual  for  obtaining  payment  and  satisfaction  of  the  amouut  of  such 
judgment,  it  shall  be  lawful  for  the  party  or  parties  so  having  obtained 
judgment  against  such  public  officer  for  th<  time  being,  to  issue  execu- 
tion against  any  person  or  persons  who  was  or  were  a  member  or  mem- 
bers of  such  corporation  or  copartnership  at  the  time  when  the  contract 
or  contracts,  or  engagement  or  engagements,  in  which  such  judgment 
may  have  been  obtained,  was  or  were  entered  into,  or  became  a  member 
at  any  time  before  such  contracts  or  engagements  were  executed,  or  was 
a  member  at  the  time  of  the  judgment  obtained  : 

••  Provided  always,  that  no  such  execution  as  last  mentioned,  shall  be 
issued  without  have  first  granted  on  motion  in  open  court,  by  the  court 
in  which  such  judgment  shall  have  been  obtained,  and  when  motion  shall 
be  made  on  notice  to  the  person  or  persons  sought  to  be  charged,  nor 
after  the  expiration  of  three  years  next  after  any  such  person  or  person- 
shall  have  ceased  to  be  a  member  or  members  of  such  corporation  or  co- 
partnership." 

The  reader  ought  to  bear  in  mind,  that  there  is  great  difficulty  iu  con- 

Btruing  this  statute.      Both  courts  of  law  and  equityfa)  have  experienced 

embarrassment,  in  acting  on  the  statute.    Its  enactments  have  been  found, 

by  judicial  authority,  to  be  inconsistent  with  each  other,  and  Dot  entirely 

intelligible.      The  first  section  appears  to  create  a  several  liability  on  the 

if  the  several  members,  to  pay  all  bills  and  notes  issued  by  the  oom- 

.  and   all    Bums   borrowed,  and  owed   by  the  company;  and   it  has 

been  frequently  noticed,  that  this  clause  extends  the  ordinary  liability 

There   is  nothing  to  take  away  the  liability,  which,  in  equity,  would 

,  .   'attach  to  the  assets  of  a  deceased  partner,  who  is  a  party  to  the 

L         J  contract 

The    11th  section   relates  to  decrees  of  courts  of  equity,  recovered 

(u)  Bosanquel  v.  Woodford,  5  <t».  B.  321. 
'.<  o.  IV.  c.  46,  B.  13. 
3<     Barker  v.  Buttress,  7  Beav.  134  :  Bicketta  v.  Bowhay,  3  C.  D.  000  ;  see 

tQ,  200-203. 


COPARTNERS  III  TS,    ETC.  343 

against  the  public  officer.  We  may  observe,  that  it  is  difficult  to  recon- 
cile the  provisions,  as  to  decrees  in  equity,  with  those  as  to  judgments  at 
common  law.  A  decree  of  a  court  of  equity  may  be  a  simple  order  to 
pay  money,  as  simple  as  a  judgment  of  a  court  of  law.  By  the  11th 
section,  a  decree  for  payment  of  money,  is  to  ba  enforce!  on  every,  or 
any  member  of  such  copartnership,  in  the  same  manner  as  if  they  were 
parties  before  the  court.  The  very  special  provisions  of  the  13th  section, 
are  not  to  be  found  in  the  eleventh,  as  applicable  to  a  decree,  which  is 
to  result  in  the  payment  of  money. 

By  the  13th  section,  execution  is  first  to  be  issued  against  any  member, 
or  members,  for  the  time  being,  of  the  copartnership;  that  is,  who  are 
partners  at  the  time  of  the  execution ;  and,  in  case  that  should  be  inef- 
fectual, for  the  purpose  of  obtaining  satisfaction,  then  execution  may  be 
issued  against  certain  persons,  who  have  ceased  to  be  members  before 
that  time.  This  section  provides  only  the  mode  of  issuing  execution 
against  those  persons  who  are  liable  at  law.  If  the  assets  are  liable  in 
equity  only,  this  clause  contains  no  means  by  which  that  liability  may 
be  enforced.  It  appears,  however,  that  it  does  not  follow,  that  there  is 
no  liability  in  equity.  The  state  of  the  law,  and  the  previous  sections 
of  the  act,  appear  to  show,  that  there  is  to  be  a  liability  in  equity ;  and 
if  that  be  so,  that  liability  must  be  enforced,  according  to  the  ordinary 
principles  of  the  Court  of  Chancery,  because  there  is  nothing  about  it  in 
the  clause,  pointing  out  how  a  judgment  at  common  law  is  to  be  enforced 
against  the  parties  legally  liable. 

In  asserting  an  equitable  claim  against  the  assets  of  a  deceased  partner, 
however,  it  seems  that  regard  must  be  had  to  those  provisions  of  the  act, 
which  would  have  been  ^applicable,  if  it  had  been  a  legal  lia-  p^,-, 
bility,  according  to  the  view  expressed  by  Lord  Langdale,  in  a  L  J 
case  arising  on  this  act. (z) 

The  object  of  the  13th  section  is,  to  provide  a  mode  of  first  rendering 
liable  the  funds  of  the  partnership,  which  are  primarily  applicable  to 
discharge  the  debt,  by  issuing  execution  against  those  who  have  the 
control  over  those  funds  in  the  first  instance,  and  execution  is  not  to  go 
against  those  who  have  no  control  over  the  funds,  until  the  resources  of 
the  first  class  have  been  found  not  to  be  available.  Hence,  on  an  appli- 
cation in  equity,  to  enforce  the  equitable  liabilities  of  a  deceased  partner, 
in  the  same  way  as  though  he  had  ceased  to  be  a  member  by  transfer, 
the  liability  must  first  be  shown  not  to  be  capable  of  being  satisfied  by 
proceedings  against  those  who  were  members  at  the  time. (a) 

Upon  these  two  sections,  viz.  ss.  12,  13,  it  is  to  be  remarked,  that 
three  modes  of  carrying  into  effect  a  judgment  obtained  against  a  public 
officer,  are  given  according  to  circumstances. 

Execution  may  be  had  upon  the  joint  property  of  the  body,  or  upon 
the  individual  property  of  each,  or  any  number,  or  any  one  of  the  mem- 
bers, for  the  time  being ;  or  in  case  such  recourse  be  ineffectual,  to  satisfy 

(z)  Barker  v.  Buttress,  1  Beav.  134  ;  see  Ricketts  v.  Bowhay,  3  C.  B.  900,  where 
it  was  doubted  whether  recourse  could  be  had  at  law  against  estate  of  deceased 
member. 

(a)  Heward  v.  Wheatley,  cor.  Parker,  V.  C,  5  De  G.  &  S.  552. 


,H         GRANT  ON  THE  LAW  OF  BANKING. 

the  amount  due  on  the  judgment,  then  execution  may  be  had  against  the 
individual  property  of  all.  or  anj  of  such  persons  as  were  members  at  the 
time  when  the  contract  was  entered  into,  or  became  members  before  the 
date  of  the  contract,  or  were  members  at  the  time  of  obtaining  judgment, 
provided  that  no  person  be  liable  for  more  than  three  years,  after  he  has 
1  to  be  a  member. 

At  length  it  is  well  settled,  in  the  case  of  judgment  obtained  against 
.-.  a  public  officer,  that  the  proper  mode  of  proceeding  *to  exeou> 
L      'J  tion  against  any  other  member  is,  by  way  of  scire  facias,  ami 
not  by  suggestion  on  the  roll.(t) 

When  it  i-  desired  t<<  issue  execution  against  the  public  officer  himself, 
ire  facias  is  necessary.(c) 

Otherwise  the  plaintiff  nm.-t  proceed  by  sci.  fa.  on  the  judgment, 
against  a  member,  or  members,  for  the  time  being,  of  the  copartnership. 
In  such  ea.-e,  the  person  ..n  whose  goods  it  is  intended  to  proceed  by  Bci. 
fa.  to  execution,  must  be  ascertained  to  be  an  actual  member  of  the  com- 
pany;  in  one  case,  a  person  was  held  not  to  be  a  shareholder  in  a  com* 
pany,  although  the  statute  constituing  the  company  stated  him  to  be  so; 
but  this  was  under  peculiar  circumstances. (</) 

Again,  where  the  deed  of  settlement  of  the  company  requires  certain 
acts  to  be  done,  by  persons  marrying  female  shareholders,  and  certain 
other  acts  to  be  done  by  executors  of  deceased  shareholders,  before  they 
can  respectively  become  members  of  the  company;  it  is  necessary  to 
make  parties  liable  on  scire  facias,  as  husbands,  or  executors,  that  they 
he  shown  to  have  performed  the  prescribed  aota.(e) 

S  ■.  where  the  deed  of  settlement  stated  that  every  transferee  of  shares, 

who  is  not   already  a  member  of  the  company,  was   thereby  to   become  a 

member  of  the  company  as  to  obligations,  but  not  as  to  benefits,  until  he 

ated  the  deed  of  settlement;  and  also  stated  that  a  transferee  of 

shares,  who  had  previously  executed  the  deed  of  settlement,  was  to  bc- 

■i  member  in  respect  of  the  transferred  shares,  from  the  date  of  the 
transfer,   without  again  executing  a  deed,  and  a  purchaser  of  shares 

ted  a  deed,  transferring  from  the  vendor  to  himself  the  shares,  the 

purchaser  thereby  covenanting  with  the  vendor,  and  with  the  public 

.  officer  of  the  ^company,  to  pay  all  instalments,  &o.,  and  also  to 

L  I  perform,  and  keep  all  the  covenants  and  stipulations  of  the  deed 

of  settlement,  &c.  and,  if  required  by  the  directors  to  execute  a  deed  of 

i  wit  tn  the  trustees,  or  public  officer,  to  observe  all  regulations  affect- 
ing holders  of  shares  in  the  company;  still,  it  was  held  in  equity,  that 
tin-  execution  of  this  deed  of  transfer  was  not  constructively,  or  in  snl>- 
stance,  an  execution  of  the  deed  of  settlement  ;  that  the  purchaser  might 
be  a  specialty  debtor  to  tic  company,  against  whom  they  might  rank, 
under  the  Winding-up  A.ct,  (1848,)  as  specialty  creditors;  but  that  such 

itiuii  did  not  make  him  a  member  as  to  benefits//') 

Ransford  v.  Bosanqnet,  'J  <,».  B.  :*::-'.     So-  in  M.  &  w.  71ft,  720. 
Barwood  v.  Law,  7  M.  k  W.  203. 

..  Berkeley,  ll  Jar.  242;  8.  0.,  18  I..  J.,  <'.  B.  107. 
I  ■    IgBon  v.  Bell,  ■>  Bxcb.  967  :  Ness  \ .  Armstrong,  I  Bxch.  21 ;  Ness  v.  Ber- 

v        .  Angaa,  3  Exi  h.  BOS. 
Hay  w.  Willoughby,  10  Han-,  242;  cor.  Turner,  V.  C,  Wightman,  J,  ex- 
plaining Be  Btraffon's  Executors,  1  De  <:.,  M.  k  G.  577. 


COPARTNERS  II  ITS,    ETC.  345 

Shares,  and  Shareholders. — Again,  where  the  deed  of  settlement  de- 
fined shareholder,  and  member,  to  mean  the  owner  of  a  share,  or  interest 
in  the  capital,  and  joint  stock  of  the  company;  and  provided  that  the 
shares  should  be  transmissible  to  personal  representatives,  but  no  executor 
should,  as  such,  be  a  member,  but  that  every  executor  might  either  sell 
his  testator's  shares,  or  constitute  himself  a  member,  in  respect  of  them, 
by  a  mode  pointed  out  by  the  deed,  and  that  the  directors  might  declare 
the  shares  forfeited,  in  case  executors  did  not  constitute  themselves  mem- 
bers, and  the  deed  provided  for  the  payment  of  calls  by  shareholders : 
there,  a  transferee  of  shares  having  covenanted  in  the  transfer  deed  with 
the  trustees  of  the  company,  to  perform  the  stipulations  of  the  deed  of 
settlement,  died,  and  his  executor  took  no  step  to  become  a  member;  in 
an  administration  suit  against  the  executor,  it  was  held  that  the  com- 
pany were  entitled  to  prove  as  creditors,  in  respect  of  a  call  made  after 
the  death ;  for,  that  under  the  provisions  of  the  jieed  in  question,  execu- 
tors were  placed  in  the  position  of  ^holders  of  shares  in  the  com-  r^jor-i 
pany,  although  not  having  all  the  rights  which  belong  to  an  L  J 
oioner  of  shares. (g\ 

In  scarcely  any  case  can  a  person,  once  regularly  a  shareholder,  and 
member  of  a  company,  disprove  his  being  still  so,  as  alleged  in  the  scire 
facias,  except  by  showing  a  regular  transfer  in  the  manner  required  by 
the  deed  of  settlement.  (A) 

Throughout  the  statute,  mention  is  made  of  shares,  and  shareholders, 
and  the  idea  of  shares  seems,  in  popular  estimation,  to  be  inseparably 
connected  with  idea  of  a  banking  copartnership. 

Shares,  however,  (it  has  been  laid  down,)  are  not  necessarily  a  part  of 
the  constitution  of  a  banking  copartnership,  under  7  Geo.  IV.  c.  46.  It 
does  not  appear  to  be  at  all  necessary,  that  their  capital  should  be  divided 
into  shares ;  although  trading,  and  other  companies,  with  letters  patent, 
but  not  incorporated,  carrying  on  business  under  the  provisions  of  7 
Will.  IV.  &  1  Vict.  c.  73,  must  have  their  capital  divided  into  shares, 
and  transferable ;  and  it  is  not  that  such  a  banking  copartnership  has  its 
capital  divided  into  shares,  that  would  alone  make  it  a  "  public  com- 
pany," within  the  meaning  of  1  &  2  Vict.  c.  110;  it  might,  and  would 
be  such  a  public  company,  without  any  such  division  into  shares ;  be- 
cause the  attributes  of  publicity  would  still  exist — the  return  of  the 
names  and  places  of  abode  of  the  members,  from  time  to  time,  and  of  the 
officers  appointed  to  sue,  and  be  sued,  on  behalf  of  the  company. (?) 
There  is  a  further  attribute  of  publicity  conferred  by  the  later  statute,  7 
&  8  Vict.  c.  32,  s.  21,(&)  which  obliges  banking  copartnerships  to  make 
returns  annually  to  the  Inland  Revenue  Office,  of  *the  name,  pM^g-i 
residence,  and  occupation  of  every  partner,  which  return  must  L     c   J 

(</)  Heward  v.  Whentley,  3  De  G.,  M.  &  G.  628,  646  ;  see  Pentland  v.  Gibson,  1 
Ale.  &N.  311. 

(h)  Bosanquet  v.  Shortridge,  4  Exch.  699  ;  see  Ex  parte  Hall,  1  Mac.  &  G.  307  ; 
and  per  Ld.  St.  Leonards,  5  H.  Lds.  323,  animadverting  on  Bosanquet  v.  Short- 
ridge. 

(i)  1  Sim.  (N.  S.)  239.  As  to  not  keeping  share  register  book,  see  Bagge's  case, 
20  L.  J.,  Ch.  229. 

(&)  See  supra,  p.  444. 


GRANT  ON  THE  LAW  OF  BANKING. 

be  published  once  a  year,  in  a  newspaper  circulating  in  the  town  or 
county  within  which  the  bank  is  situate.  This,  however,  applies  to  even 
partnership  of  bankers. 

Shares  in  a  banking  copartnership  are  Bhares  in  a  "public  company/' 
bo  be  chargeable  by  judge's  order,  in  case  of  a  judgment  recovered 
againsl  the  owner  oi  them,  within  the  I  Jtli  section  of  1  &  -  Viet.  c.  1 1<(. 
which  empowers  a  judge  at  chambers  to  granl  an  order,  charging  stock, 
shares,  &c.,  in  public  companies,  whether  incorporated  or  unincorporated, 
Ac.  provided  that  nothing  shall  be  done,  to  have  the  benefit  of  such 
charge,  within  six  months  from  the  date  of  the  order.  The  effect  of  the 
charge  is  to  be  the  same,  as  if  the  judgment  debtor  had  charged  the 
shares.  (£) 

In  truth,  there  i-  no  such  legal  term  known  as  a  "public  company" 
not  incorporated;  and,  it  has  been  considered,  that  banking  copartner- 
ships established  undcr.7  <!eo.  IV.  c.  40,  and  3  A:  4  Will.  o.  98,  formed 
one  class,  and  companies  associated  for  trading  and  other  purposes, 
having  letters  patent  granted  by  the  crown,  under  7  Will.  IV.  &  1  Vict. 
C.  73,  but  not  incorporated,  formed  the  other  class,  of  unincorporated 
companies,  to  which  alone  the  term  public  company  could  be  applicable, 
at  the  time  of  the  passing  of  1  &  -  Vict.  c.  110,  and  the  former  class 
appears  to  be  within  the  meaning  of  the  statute ;  all  the  attributes  of 
publicity  appear  to  exist  in  the  one  case,  as  in  the  other.(?») 

A  clause  in  the  deed  of  settlement,  making  the  approbation  of  the 
directors  necessary  to  the  sale  of  shares,  has  no  effect  of  itself,  to  limit 
the  assignability  of  shares;  in  practice,  the  shares  are  transferable,  (n) 
notwithstanding. 

PM07-1  *Still,  there  can  he  no  doubt,  it  is  conceived,  that  the  directors 
<-  -1  may  in  Buob  case,  refuse  their  approbation  to  any  proposed  trans- 
.  and  so  prevent  the  contemplated  transfer  at  their  discretion,  which 
cannot  be  impeached  by  any  proceeding  at  law,  since  the  legislature  has  in 
effect,  invested  them  with  it,  by  not  ordering  that  the  shares  shall  be  trans- 
ferable, and  by  ordering  that  the  duties  of  the  directors  shall  be  limited  by 
the  deed  ;  and.  ii  seems,  the  company,  the  intended  transferee,  and  the 
transferor,  would  be  each  alike  without  any  means  of  punishing  the 
directors  for  withholding  their  approbation,  unless  mala  fides  could  be 
shown. 

Shares  us  has  been  observed,  may  be  charged  by  a  judge's  order, 
under  1  A  2  Vict.  e.  110,  s.  14,  with  a  judgment  debtj  although  the 

deed  of  Bettlement   provide,  "that  the  shares  should  nut  he  transferable, 

except  by  the  consent  of  the  directors:"  also,  "that  if  any  order  or 
decree  was  made  against  any  proprietor,  bj  which  his  shares  became 
charged,  they  should  be  forfeited  to  the  company."  This  appears,  from 
a  case  where  the  company  was  not  registered,  under  7  A  8  Vict.  c.  110, 

(I)  1  &  'J  Vict.  c.  llu.  b.  14;  per  Parke,  !'...  Graham  v.  Connell,  19  L.  J.,  Bzch. 

\-  t<.  bank  stock,  see  Grainger  v.  Slip  !5  L.  J.,  Ohanc.  573. 

IPIntyre  \.  Connell,  l  Sim.  (N.  B.)  237,  238  :  Ld.  Cranworth,  V.  C,  Graham 

poll,  i:'  I..  .1..  Exch.  361. 
('-)  Per  Parke,  B.,  Graham  v.  Connell,  19  I..  -I..  Exch.  362;  see  the  clause,  1 
-      228. 


COPARTNERSHIPS,    ETC.  347 

but  was  empowered  to  sue  and  be  sued,  by  public  officer,  under  7  Geo. 
IV.  c.  46,  and  7  &  8  Vict.  c.  113,  s.  47, (o)  and  where  the  Court  of 
Exchequer,  holding  it  to  be  somewhat  doubtful,  whether  the  body  Mas  a 
"  public  company, "(j>)  within  the  meaning  of  1  &  2  Vict.  c.  110,  refused 
to  set  aside  a  judge's  order,  which  had  been  made. (7)  However,  tin' 
same  company,  the  Union  Bank  of  London,  has  since  been  held  by 
Lord  Oanworth,  V.  C,  to  be  a  "  public  company,"  within  the  statute 
1  it  2  Vict.  c.  110, (V)  and  the  law  may  be  considered  to  be  clear,  that 
shares  in  similarly  constituted  companies,  are  chargeable. 

*Hence  shares  in  all  copartnerships,  &c,  under  7  Geo.  IV.  c.  r#_(oo-i 
46,  are  chargeable  in  like  manner ;  for  as  the  7  &  8  Vict.  c.  L  J 
113,  s.  47,  directs  all  judgments,  &c,  to  be  enforced  in  like  manner,  as 
in  case  of  such  companies  carrying  on  business  beyond  sixty-five  miles 
from  London,  and  the  shares  of  companies  carrying  on  business  within 
sixty-five  miles  from  London,  are  decided  to  be  chargeable,  it  is  evident 
the  others  are  so  also ;  or,  in  other  words,  all  shares  in  these  bodies  are 
chargeable.  However  some  obscurity  is  cast  over  the  meaning  of  the 
clause  by  reason  of  the  proviso — that  the  company  shall  make  out,  &c, 
the  several  returns  required  by  7  Geo.  IV.  c.  46. 

Also,  in  equity,  a  second  incumbrancer  on  shares,  the  prior  incum- 
brancer being,  ex.  gra.,  the  company,  who  has  a  lien  or  charge  on  the 
shares,  may  by  a  bill  properly  framed,  as  to  the  persons  brought  before 
the  court,  and  praying  an  account,  &c,  have  means  to  redeem  the  first — 
indeed,  that  is  his  right — and  to  have  all  the  securities  held  by  the  first 
assigned  to  hiin.(s) 

A  testator  at  his  death  held  a  number  of  shares  in  a  banking  copart- 
nership, called  "  The  Northumberland  and  Durham  District  Banking- 
Company."  The  shares  were  101.  shares,  and  the  testator  had  paid  up 
two  instalments  of  21.  10s.  per  share,  being  all  that  had,  up  to  the  time 
of  his  death,  been  called  for  by  the  directors.  On  10th  October,  1843, 
the  testator  died,  devising  all  his  shares  to  legatees,  who  were  infants. 
8th  April,  1845,  the  executors  caused  the  shares  to  be  transferred  into 
their  names,  assenting  to  the  legacy,  and  on  3rd  May,  1847,  paying 
309/.  15s.  as  legacy  duty.  They  also  received  a  dividend  of  2,065Z. 
upon  the  shares.  In  October,  1848,  the  remaining  5/.  per  share  is  called 
up  by  the  directors;  this  the  executors  paid,  and  afterwards  received 
further  dividends.  Then  the  question  was,  whether  the  legatees  of  the 
shares,  or  the  residuary  legatees,  ought  to  bear  the  burden  of  the  call 
of  1848. 

*Now,  in  this  case,  by  the  provisions  of  the  deed  of  settlement,  p^gg-i 
the  testator's  estate  was  not  liable  to  the  call  of  5/.,  at  the  time  it  L  J 
was  made ;  for,  although  by  the  deed  of  settlement,  that  estate  was  at  the 

(0)  See  supra,  p.  475.  It  was  not  a  company  constituted  under  7  &  8  Vict.  c. 
113;  its  shares  were  501.  shares  ;  that  statute  requires,  s.  2,  the  shares  to  be  not 
less  than  100Z.  each.     See  1  Sim.  (N.  S.)  225. 

(p)  See  1  Sim.  (N.  S.)  233,  as  to  meaning  of  these  words. 

(q)  Graham  v.  Connell,  19  L.  J.,  Exch.  3G4 ;  S.  C,  1  L.  M.  &  P.  438  ;  see  Morris 
v.  Manisty,  7  Q.  B.  674. 

(r)  M'Intyre  v.  Connell,  1  Sim.  (N.  S.)  225. 

(s)  M'Intyre  v.  Connell,  1  Sim.  (N.  S.)  250. 


348         GRANT  ON  THE  LAW  OF  BANKING. 

time  of  the  call  liable  to  such  call,  whenever  it  should  be  made,  vet 
before  it  actually  was  made  die  shares  had  been  transferred  into  the 
eamee  of  the  executors,  and  by  another  provision  of  the  deed,  the 

liability  did  not  continue  longer  than  until  the  Bharee  should  have  been 
transferred  out  of  the  testator's  name,  into  that  of  some  other  person. 
By  this  transfer  the  executors  made  themselves  trustees  for  the  Infant 
legatees,  who,  on  attaining  twenty-one,  adopted  the  act, and  claimed  the 

legacy.  Now  the  effect  of  this  was  precisely  the  same  as  if  the  shares 
had  been  at  that  time  transferred  to  other  persons,  in  trust  for  the 
i-  a-  if,  the  legatees  having  already  attained  twenty-one,  the 
transfer  of  the  shares  had  been  made  at  once  to  them. 

A-  regards  the  company,  the  executors,  by  the  transfer  into  their  own 
name-,  have  become  shareholders,  that  is  to  say,  they  became  personally 
liable  to  pay  the  call  to  the  company,  whether  the  testator's  estate  was 
Bolvent  or  insolvent.  The  assets  of  the  testator  were  no  longer  liable  to 
make  that  payment.  Under  the  deed  in  question  the  directors  having 
permitted  the  transfer,  the  estate  of  the  testator  was  thereby  discharged 
from  all  further  liability,  however  ample  that  estate  might  have  been, 
and  the  executors  personally  might  have  been  unable  to  discharge  it. 

Then,  as  between  the  persons  interested  under  the  testator's  will,  the 
call  must  be  borne  by  the  specific  legatees  of  the  shares;  for  the  payment 
of  the  call  could  not  have  been  enforced  by  the  company  against  the 
general  personal  estate  of  the  testator,  and  there  is  no  intimation  of  a 
contrary  intention  in  the  will. 

If  this  result  were  not  adopted,  it  would  seem  to  follow  that  if  the 
•  ir  had  specifically  bequeathed  to  one  who  got  them  transferred  into 
r*40ffl  k*8  own  nameJ  alu'  tne  company  ^afterwards  failed,  and  thereby 
L  -I  contribution  was  required  in  respect  of  the  shares,  then,  that  in 
such  ease,  the  testator's  general  personal  estate  would  be  liable  to  pay 
such  contribution. 

The  same,  it  is  to  be  observed,  would  have  been  the  result,  if  the 
shares  had  not  been  transferred  to  the  executors,  for  the  testator's  interest 
in  the  subject  matter  of  the  bequest  was  complete  at  the  time  of  the 
death,  and  the  future  calls  must  fall  on  the  legatee,  who  takes  cum  onere, 
unless  the  will  shows  a  contrary  intent;  if,  however,  the  last-mentioned 
eall  had  been  contemplated  before  the  death,  and  it  had  been  required 
to  make  his  interest  in  the  shares  complete,  ex.  gra.  if  the  further  eall 
were  required  before  the  company  could  be  worked,  or  before  any  divi- 
dend could  )<"  paid,  then  the  general  personal  estate  of  the  testator  ought 
.■■  borne  the  expense  of  the  call.     The  transfer  to  the  executors  is 

immaterial  in  this  Tiew.(f) 

In  a  ease  of  an  ordinary  banking  copartnership — as,  for  instance,  one 
of  >i.\  partners — if  one  becomes  bankrupt,  no  liability  can  arise  against 
him  or  his  estate,  in  respect  to  the  trading  as  bankers,  after  his  bank- 
ruptcy: in  case  of  a  banking  copartnership,  of  more  than  si\  partners,  to 
which  tin-  Winding-up  Acts  apply,  matter-  Maud  somewhat  on  the  same 
•.'round.     The  shares  in  it  are  not   property,  as  the  shares  in  an  incor- 

(t)  Armstrong  v.  Burnet,  24  L.  J..  Chanc.  473. 


COPARTNERSHIPS,    ETC.  349 

poratcd  joint  stock  company  of  any  description  of  trade  are,  but  constitute 
an  interest  determinable  on  bankruptcy,  and  consequently  a  bankrupt 
member's  name  cannot  be  put  on  the  list  of  contributories  on  the  wind- 
ing up,  in  respect  of  liabilities  incurred  subsequently  to  his  bank- 
ruptcy, (w)  But  in  neither  incorporated  nor  unincorporated  companies 
of  this  kind  are  the  shares  interests  in  land.(.r) 

*A  contract  for  the  sale  of  shares  in  a  banking  copartnership  r^jnn 
in  ordinary  circumstances,  is  not  a  contract  for  the  sale  of  "  goods,  «-  J 
wares,  or  merchandize,"  within  the  17th  section  of  the  Statute  of  Frauds, 
so  as  to  require  a  written  memorandum. (y\ 

The  power  of  attorney  to  sell,  &c,  shares,  does  not,  without  express 
words,  give  authority  to  pledge ;  it  is  indispensable  that  a  person  who  is 
asked  to  take  a  pledge  of  shares,  in  such  circumstances,  should  ascertain 
whether  the  power  includes  pledging ;  if  not,  he  cannot  safely  enter  up- 
on the  transaction. (z\ 

Executors. — The  following  decision  deserves  the  careful  attention  of 
directors  and  officers  of  copartnerships  in  banks,  who  wish  for  guidance 
as  to  their  duties  towards  executors  and  administrators,  in  respect  of 
shares. 

A.,  by  his  will,  gives  to  trustees,  their  executors,  &c,  all  his  personal 
estate,  &c,  upon  trust,  to  invest  one  moiety,  and  permit  the  dividends 
and  profits  thereof  to  be  received  by  his  wife,  Mercy  A.,  during  viduity, 
&c.  Part  of  this  moiety  was  invested,  in  the  name  of  Mercy  A.,  in  the 
purchase  of  shares  in  a  banking  copartnership.  Mercy  A.,  remaining  a 
widow,  died  intestate.  Administration  was  taken  out  by  B.,  the  surviv- 
ing executor  under  the  husband's  will,  and  stamp  duty  was  paid  suffi- 
cient to  apply  to  the  whole  of  the  testator's  personal  estate.  Then  B., 
in  his  double  capacity  of  executor  and  administrator,  requests  the  bank- 
ing company  to  register  the  letters  of  administration  in  their  books,  and 
to  transfer  the  shares  and  pay  the  dividends  to  him.  This,  however,  the 
bankers  refused  to  do,  and  requiring  the  luxury,  as  was  said,  of  judicial 
^indemnity,  became  involved  in  a  suit  in  chancery,  the  result  of  ^  iqfri 
which  was  that  they  were  obliged  to  do  at  last  what  they  had  at  L  ""-I 
first  refused  to  do,  and  also  to  pay  the  costs  of  the  suit,  the  master  of  the 
rolls  observing,  bankers  are  not  required  to  take  notice  of  trusts ;  they 
may  require  an  affidavit  of  the  fact,  under  48  Geo.  III.  c.  149,  ss.  35, 
36,  37,  but  they  are  not  to  inquire  whether  the  affidavit  is  true.  They 
are  to  make  the  transfer,  it  seems,  at  all  events. (a) 

In  case  of  a  banking  copartnership,  the  deed  of  settlement  of  which 
provided  that  the  executor  of  a  deceased  shareholder  should  not  be  a 

(u)  Greenshield's  case,  5  De  G.  &  S.  599 ;  see  Myers  v.  Perigall,  2  De  G.  M.  & 
G.  599,  cor.  Ld.  St.  Leonards,  C.  As  to  shares  in  incorporated  company,  Edwards 
v.  Hall,  25  L.  J.,  Chanc.  85,  cor.  Ld.  Cranworth,  C. 

(x)   25  L.  J.,  Chanc.  86. 

(y)  Humble  v.  Mitchell,  11  A.  &  E.  205  ;  see  1  Exch.  858,  859.  When  in  "order 
and  disposition"  of  bankrupt,  see  12  Cla.  &  F.  Ill ;  2  Sim.  &  S.  292. 

(z)  Duncuft  v.  Albrecht,  12  Sim.  199;  see  5  Hare,  242.  As  to  stamp  on  trans- 
fer of  shares  in  incorporated  companies,  Sweet,  Supplem.  Bythew.  Convey.  214  ; 
see  2  Q.  B.  321. 

(a)  Hennell  v.  Strong,  25  L.  J.,  Chanc.  407. 


G  B  A  N  I    0  N    THE    L  A  AV    OF    B  A  X  K  I  N  G. 

member  of  the  company  in  respect  of  such  .-hares,  but  should  bo  at  liberty 
t"  Bell  them,  or,  at  hi-  option,  to  become  a  member,  <>n  complying  with 
certain  terms,  and  that  if  be  did  uot  become  a  member,  he  should  not  be 
entitled  to  any  dividend  iu  respect  of  such  shares,  accruing  alter  the 
death  of  the  testator;  the  executor,  not  haying  complied  with  the  terms 
above  referred  to,  was  held  not  to  be  a  member  tor  the  purpose  of  exe- 
cution going  against  him  by  Bci.  fa.  on  judgment  against  the  public  offi- 
cer,  although  he  had  actually  received  a  dividend  which  accrued  due 
after  the  death. (6) 

Precisely  the  same  principle  governs  the  ease  of  the  husband  of  a 
female  shareholder,  where  the  deed  of  settlement  requires  that  he  shall 
go  through  certain  forms,  or  do  acts,  previous  to  becoming  a  member  : 
then  he  is  not  a  member  if  he  has  not  done  those  acts,  so  as  to  be  liable 
to  execution  under  a  sci.  fa,  :(c)  that  IS,  the  wife  remains  the  member, 
r*_tcm  Notwithstanding  the  coverture, (</)  and  may  sue  for  the  dividends 
L  J  and  recover,  unless  there  he  a  plea  in  abatement. (<) 

It  appears  to  be  clearly  held  in  equity,  however,  that  the  terms  of  the 
deed  of  settlement  maybe  such  that  a  partner  may,  by  covenanting  that 
his  executors  shall  perform  all  things,  with  respect  to  his  shares,  that  he 
would  have  been  liable  to  perform  in  his  lifetime,  bind  his  executor  in 
equity;  that  is  to  say,  may  render  his  estate  liable  iu  equity,  to  contri- 
bute to  the  debts  of  the  copartnership.^/') 

AVhere  shares  were  specifically  bequeathed  to  infants,  and  were  trans- 
ferred into  the  names  of  executors,  and  several  years  afterwards  a  call  is 
made,  it  was  held  that  it  must  be  paid  by  the  legatees,  and  not  out  of 
the  testator's  residuary  estate,  fo) 

Mortgage. — .V  transfer,  by  way  of  mortgage,  having  been  made  of 
shares  iii  a  banking  copartnership,  the  mortgagor  afterwards  pays  oil' the 
debt  and  applies  for  a  retransfer  of  the  shares;  but  the  directors  did  not 
permit  the  retransfer  to  be  made.  In  the  meantime,  a  creditor  recovered 
judgment  against  the  public  officer,  and  threatened  execution  against  the 
mortgagee,  as  one  of  the  shareholders. 

A  court  of  equity  held,  that  where  the  mortgage  was  made  simply  as 
an  absolute  transfer,  subject  to  redemption,  and  nothing  had  passed, 
binding  the  mortgagor  to  take  a  retransfer  of  the  share-,  the  mortgagor 
was  not  liable  to  indemnify  the  mortgagee  against  debts  incurred  after 
the   transfer  made  on  the  mortgage,  and  before  the  debt  was  paid  oil'; 

(Ij)  Ness  v.  Armstrong,  l  Exch.  21  :  Bee  1  Exch.  195.     Nor  is  lie  liable  as  a  con- 
tributory under  the  Winding-up  1  De  G.  &  S.  5G0;  see  5  Exch. 
Pentland  v.  Gibson,  1  Ale.  .v  N.  311. 

. .  An-:!-.  3  Exch  l  Exch.  '1G;  Dodgsou  v.  Bell,  5  Exch.  967, 

eh.  ('!i.     As  i"  '"■iie.'-  contributory  under  Winding-up  An-,  see  Burlinson's 
;  De  G.  &  S.  18;  Sleight's  case,  3  De  G.  &  S.  210;   Gouthwaite's  case,  id. 
5  Exch.  979.     The  L3tfa  Beet.,  limiting  the  liability  of  partners  to  three 
years  alter  ceasing  to  no  effect  in  varying  the  liability  to  contribute  be- 

the  partm  re  inter  se.     Gouthwail  I  Mac.  &  <!.  1st. 

I'cr  Jervis,  <'.  J.,  22  L.  J.,  '*.  B.  177  ;  as  to  contribution,  .Sadler's  case,  3  De 
3.  36. 
•  dton  v.  Midland  Counties  Railway  Company,  22  L.  J.,  C.  B.  177. 
Ma,  .  &  G.  L99. 

■  \ .  Burnet,  20  Bear.  -124. 


COPARTNERSHIPS,    ETC.  .');,] 

but  that  the  mortgagor  here  having  paid  off  the  mortgage,  and  elected 
to  take  the  retransfer  of  the  shares,  the  mortgagee  became  a  trustee  of 
the  shares  for  the  mortgagor,  *and  the  mortgagor  was  bound  to  r-^jojn 
indemnify  him  against  the  whole  expenses,  or  liabilities,  which  L  J 
he  had  properly  incurred,  by  holding  and  maintaining  the  shares.  That 
the  mortgagor,  indemnifying  the  mortgagee,  in  respect  of  the  costs,  was 
entitled  to  take  proceedings  in  the  name  of  the  mortgagee,  to  compel  the 
retransfer  of  the  shares,  and  to  resist  the  proceedings  against  the  share- 
holders under  the  judgment. 

The  mortgagee,  in  such  case,  does  not  appear  to  have  any  right,  at 
law,  against  the  mortgagor. 

It  was  admitted,  in  the  case,  that  the  company  was  insolvent,  and  the 
shares  comparatively  valueless. (/i) 

Lien. — Where  a  deed  of  settlement  of  a  banking  copartnership  stipu- 
lated, that  the  company  should  have  a  lien  on  the  shares  of  such  proprie- 
tors as  were  customers  and  indebted  to  the  bank,  and  that  no  share  should 
be  transferred  without  the  consent  of  the  directors ;  and  an  abstract  of 
these  provisions  was  indorsed  on  the  certificate  of  the  share  held  by  each 
proprietor ;  and  a  proprietor  of  shares  became  bankrupt,  being  largely 
indebted  to  the  bank  for  advances ;  the  shares  were  held  not  to  pass  to 
his  assignees,  as  being  in  the  reputed  ownership  of  the  bankrupt,  so  as 
to  defeat  the  lieu  of  the  bank,  as  provided  for  in  the  deed.(i') 

So,  when  the  stipulation  was,  that  the  directors  should  have  a  lien  on 
the  shares  and  stock  of  every  shareholder,  for  debts  due  from  him  to  the 
company,  and  that  the  directors  might  cancel  and  declare  forfeited,  or 
sell  the  shares  of  such  shareholder,  or  otherwise  deal  with  the  same,  as 
the  case  might  require,  for  obtaining  payment  of  such  *debts ;  p^-i 
the  bank  was  considered  to  have  a  lien,  not  only  on  the  shares,  but  L  J 
also  on  the  dividends,  of  a  shareholder,  who  had  overdrawn  his  account 
with  them  as  a  customer,^)  and  the  notice  of  dividends,  which  was  to 
be  given  by  circular  letter,  addressed  to  each  of  the  shareholders  under 
the  deed,  did  not,  when  sent  to  the  customer  in  question,  operate  as  a 
waiver,  on  the  part  of  the  company,  of  their  rights,  because  such  notice 
was  to  be  sent,  by  the  terms  of  the  deed,  to  all,  without  reference  to  the 
state  of  their  relations  to  the  company  at  the  time. 

It  would  have  been  so,  without  any  express  provision  in  the  deed, 
provided  there  had  been  nothing  in  it  to  show  an  opposite  intention  ;  for 
that  would  have  been  the  case  in  a  common  partnership,  where  one  part- 
ner has  a  lien  upon  all  that  another  partner  has  a  right  to  receive,  and, 
without  an  intention  that  this  should  not  be  the  case  manifested  in  the 
deed,  the  ordinary  rule,  as  to  partnerships,  would  apply,  in  this  respect, 
to  a  banking  copartnership,  under  7  Geo.  IV.  c.  46. 

A  trustee  invests  part  of  the  trust  fund,  in  the  purchase  of  shares  of  a 

(h)  Phene  v.  Gillan,  5  Hare,  1.  As  to  specific  performance  of  agreement  to 
purchase,  Shaw  v.  Fisher,  2  De  G.  &  S.  11  j  Wynne  v.  Price,  3  De  G.  &  S.  310. 
As  to  identity  of  person  mentioned  in  share  register  book  with  person  sued  for 
calls,  &c,  see  Waterford,  &c,  Railway  Company  v.  Wolsely,  1  Ir.  L.  R.  (N.  S.) 
444  '  (i)  Ex  parte  Plant,  4  Deac.  &  C.  160. 

(k)  Hague  v.  Dandeson,  2  Exch.  741 ;  see  1  Mac.  &  G.  696. 

March,  1857.— 24 


GRANT  ON  THE  LAW  OF  BANKING. 

banking  copartnership,  he  himself  being,  also,  a  shareholder  in  his  own 
right  :  be  afterwards  makes  various  sales,  and  purchases,  in  these  shares 
of  the  company.  There  is  no  distinguishing  mark  by  which  the  shares 
. - : t ii  be  traced  ;  they  are  in  the  nature  of  capital,  expressed  by  quantity. 
The  trustee  then  agreed  with  the  copartnership,  to  assign  to  them  some 
of  the  shares  standing  in  his  name,  by  way  security,  for  advances  made 
by  the  bank  to  himj  but  no  transfer  was  actually  made.  The  bank  had 
no  actual  notice,  that  any  of  the  shares  were  held  on  trust.  The  trustee 
afterwards  becomes  bankrupt :  and  it  was  held,  that  the  bank  had  no 
lien  on  any  of  the  shares  which  had  been  held  in  trust;  and  that,  although 
the  shares  held,  in  trust,  might  have  been  changed,  by  selling  and  re- 
...  purchasing,  the  *trustee  must  still  be  considered  as  holding,  for 
L  J  the  purposes  of  the  trust,  the  same  number  of  the  repurchased 
shares,  which  stood  in  his  name  at  the  time  of  the  bankruptcy. (/) 

We  may  add  a  further  remark,  on  the  nature  of  shares.  It  is  not  pro- 
per  to  overlook  the  distinction  which  holds  between  the  two  classes  of 
oonincorporated  banking  companies.  They  are  either  established,  by 
deed,  in  accordance  with  7  Geo.  IV.  c.  4G,  and  the  subsequent  statutes 
or  they  are  directly  established  by  private  act  of  parliament.  In  the  last 
case,  the  agreement,  or  contract  of  partnership,  takes  the  form  of  law, 
under  the  authority  of  the  legislature.  Such  statutes  often  contain  a 
clause,  providing  that  the  interests  of  the  sharehnhh  rs  shall  I"  deemed 
personal  estate.  When  that  clause  is  embodied  in  an  act  of  parliament, 
of  course  it  is  legally  binding,  whatever  maybe  the  effect;  but,  when 
that  clause  is  contained  in  a  deed  of  partnership,  it  may  not  have  the 
lame  legal  effect  at  all,  because  parties  cannot  agree  among  themselves 
to  alter  the  legal  character,  or  incidents,  attaching  to  a  certain  descrip- 
tion of  property. 

This  is  the  distinction  which  obtains  between  the  copartnerships,  con- 
stituted by  deed,  and  copartnerships  constituted  by  act  of  parliament  ; 
and  it  appears  to  be  the  only  distinction  between  them.(ra) 

In  the  instance  of  a  banking  copartnership,  established  in  conformity 
with  7  Geo.  IV.  c.  4G,  it  has  been  held,  both  at  common  law,(/;)  and  in 
chancery,  that  shares  in  a  bank,  the  property  of  which  consisted,  in  part, 
of  freehold  and  copyhold  estates,  and  mortgages  for  terms  of  years,  is 
r*io-n  personalty,  and  not  realty,  and  may  be  legally  bequeathed  to 
L  J  ^charitable  purposes,  within   the  9th   Geo.    II.,  commonly,  bul 

erroneously,  called  the  .Mortmain  A.ct.(o) 

In  truth,  a  share  represents  the  proportions  of  the  profits  to  which 
each  holder  of  it  is  entitled;  it  does  not  empower  the  holder  to  step  upon 
the  lands  of  the  company,  or  use  anv  portion  of  them,  for  his  own  private 

purposes;  the  holder,  in   this  respect,  is  in  i ther  condition  than  an 

ordinary  pattner.(j?) 

I)  Hurray  v.  Pickett,  L2  Cla.  &  P.  :•■;:  »ee  I  Ruse.  4  If.  45. 

Myers  v.  PerigaU,  2  De  G.,  If.  ft  G.  600,  601  ;  per  Ld.  Truro,  C. 
!]  c.  B.  90;  8.  0.,  where  Bee  deed  of  settlement  ;  and  Bee  A-hton  v.  Lord 
Le,  i  De  G.  &  B.  102,  410,  n  I. 
2  De  G.,  If.  .v:  <:.  620,  621,  per  Ld.  St.  Leonards,  C. 
De  G.,  If.  &  G.,  621  :  Sparling  v.  Parker,  9  Beav, 


COPARTNE  11  SHIPS,    ETC.  :;;,;> 

Members,  or  Shareholders. — Let  us  next  inquire,  who  are  meant  by 
members,  or  shareholders.  Now,  in  the  inquiry,  whether  any  person  is 
a  subsisting  member,  it  is  often  necessary  to  observe,  whether  the  trans- 
fer from  the  shareholder,  from  whom  he  bought,  has  been  made  accord- 
ing to  the  requirements  of  the  deed  of  settlement :  thus,  if  it  be  a  provi- 
sion of  the  deed,  that  the  consent  of  a  board  of  directors  shall  be  neces- 
sary to  perfect  a  transfer  of  shares,  it  is  indispensable  to  ascertain  what 
this  consent  is,  how  it  is  to  be  signified,  what  is  a  board  of  directors,  <&c. 
However,  though  a  transfer  may  be  void,  at  law,  for  want  of  a  proper 
consent  of  a  duly  constituted  board  of  directors,  it  may  be  supported,  in 
equity,  where  the  circumstances  are,  that  it  has  been  made  in  the  Share 
Registry  Book,  and  three  directors  have  given  (as  was  usual]  a  certifi- 
cate of  the  transfer ;  and  a  return  has  been  made  to  the  inland  revenue 
officers,  that  the  transferor  had  ceased  to  be  a  member,  and,  besides,  the 
transferee  has  been  treated  as  a  shareholder  by  the  directors;  received 
dividends ;  had  sent  to  him  the  circulars  of  general  meetings,  and  notices 
of  calls,  and  had  attended  meetings. 

Also,  where,  in  the  circumstances  above  detailed,  the  bank  suspended 
payment,  and,  upon  a  call  being  made,  the  transferee  omitted  to  pay,  by 
reason  of  inability,  and  the  *bank  made  an  entry  in  the  share  r*4.QQn 
register  list,  stating  the  transfer  to  be  invalid,  for  want  of  con-  L  J 
sent,  &c,  and  made  a  fresh  return,  in  which  they  inserted  the  transferor's 
name  as  a  shareholder,  and  then  instigated  a  creditor  to  commence  an 
action,  in  which  he  obtained  judgment,  for  their  benefit,  against  their 
public  officer,  and  the  creditor  brought  a  sci.  fa.  against  the  transferor, 
and  recovered,  on  the  invalidity  of  the  transfer.^)  Nevertheless,  it  was 
held,  in  equity,  that  the  transferor  was  no  longer  a  shareholder,  as  be- 
tween him  and  the  company ;  and  that  the  proceedings,  being  collusive, 
a  perpetual  injunction  against  levying  execution  on  the  judgment  in  the 
sci.  fa.  must  issue,  (r) 

In  this  case,  therefore,  the  transferee  was  the  real  member  of  the 
company. 

With  regard  to  persons  who  may  be  members  of  banking  copartner- 
ships ;  the  trade,  or  business  of  banking,  was  held  to  be  within  57  Geo. 
III.  c.  99,  which  restrains  spiritual  persons  from  being  occupied  in  any 
trade,  or  dealings,  so  that,  if  a  bill  of  exchange  were  indorsed  to  a  bank- 
ing copartnership,  and  they  sued  as  indorsees  upon  it,  by  their  public 
officer,  to  show  that  spiritual  persons  were  partners,  and  members  of  the 
company,  defeated  the  action,  and  barred  the  company  from  recovering 
the  amount  of  the  bill,  inasmuch  as  the  copartnership  was,  in  such  case, 
carried  on  in  violation  of  the  above-mentioned  statute. 

The  consequences  were  the  same,  in  the  case  of  any  other  bauk,  in 
which  one  of  the  members  was  a  clergyman ;  even  in  the  case  where  a 
clerical  executor  continued  to  carry  on  the  business  for  the  benefit  of  the 
testator's  estate,  as  executor. (s) 

The  former  of  these  results  was  thought  to  be  so  inexpedient,  that  an 

(q)  See  4  Exch.  699. 

(r)  Shortridge  v.  Bosanquet,  16  Beav.  84,  99;  see  5  H.  Lds.  297. 

(6)  Hall  r.  Franklin,  3  M.  &  W.  259,  268. 


354  8BANT    ON    TJIE    LAW    OF    BANKING. 

lorn  act  of  parliament  was  immediately  passed,  *to  render  contnn  t- 
L  J  with  these  banking  copartnerships  valid,  although  they  might 
have  clergymen  among  the  shareholders,  or  partners,  by  an  ait  which 
was  shortly  afterwards  repealed,  and  re-enacted  with  variations,  by  a 
Btatute,(<)  which  is  given  as  follows :  by  which  it  will  be  observed,  the 
law  is  left  as  above  stated,  with  respect  to  members  of  ordinary  bank.-, 
that  is,  other  than  copartnerships  having  mure  than  six  members;  and 
also,  that  on  these  latter,  clergymen  cannot  be  directors,  or  managers,  or 
take  part  in  person  in  the  business. 

The  words,  members  fur  thu  time  l>,  //<;/,  mean  such  as  were  members 
at  the  time  of  the  issuing  of  the  scire  facias;  thus,  the  persons  sued, 
have  an  opportunity  of  pleading,  that  they  were  not  partners;  and,  if  it 
were  shown  that  they  were  on  that  issue,  that  would  show  that  they  were 
properly  liable  to  the  judgment,  on  which  the  scire  facias  issues. («) 

The  words,  now  a  member,  are  equivalent  to  </  member  /'m-  tin  time 
being,  (x) 

(Scire  Fu<  ins. — Having  ascertained  who  are  members  for  the  time 
being  in  law,  and  obtained  the  names,  etc.,  of  those  persons,  and  ser\ed 
them  with  notice  of  the  motion,  the  plaintiff,  who  has  obtained  judgment 
against  a  public  officer,  and  does  not  intend  to  issue  execution  against 
him,  is  to  move  the  court  for  a  rule  for  writs  of  sci  fa.  against  a  member, 
or  members  for  the  time  being. (y)  But,  against  such  members,  it  at 
length  seems  to  be  settled,  that  the  rule  is  absolute  in  the  first  instance, 
-.  and  need  not  be  made  in  open  *court,(z)  and  issuing  the  Bci.  fa. 
L  '  J  without  leave,  is  only  an  irregularity,  as  has  been  said,  and  can- 
not be  made  the  subject  of  a  plea,  not  being  a  ground  of  defence. (ii\ 

In  all  other  cases  within  the  purview  of  the  act,  there  must  be  a  mo- 
tion for  the  sci.  fa.  made  in  open  court,  after  notice  to  the  person  or  per- 
sons sought  to  be  charged. (6) 

Then,  what  are  the  circumstances  under  which  this  motion  will  be 
granted  : — 

In  order  to  obtain  the  leave  of  the  court  to  issue  a  scire  facias  against 
a  former  member,  applicant  must  make  out,  that  is,  the  affidavit  must 
state,  according  to  the  circumstances  of  the  case  : 

(t)  4  Vict.  c.  14  ;  see  Ex  parte  Salkeld,  3  M.,  D.  &  De  G.  126.  The  deed  of  set- 
tlement mostly  specifies  classes  of  persons  who  shall  not  lie  members,  ex  gra.,  in- 
fant.-. &c. 

(u)  Dodgson  v.  Scott.  2  Exch.  465 j  see  T  II.  &  W.  207,  208  ;  11  A.  &  E.  520. 

\x)  Nunn  v.  Lomer,  is  L.  J..  Exch.  342. 

(y)  Dodgson  \.  Scott,  2  Bxch.  167 :  Barker  v.  Buttress,  T  Beav.  143.  What  affi- 
davit sufficient,  see  25  L.  J.,  Exch.  249. 

(z)  Harrison  v.  Tysan,  cor.  Crompton,  J.,  1  Bail  Court  Cas.  Ill;  Johnson  v. 
Brettell,  7  Jur.  210;  Bee  Esdaile  v.  Trustwell,  l  Exeh.  371;  Bank  of  Scotland  \ 
Fenwick,  1  Exch.  795,  where  Rolfe,  B.,  was  of  opinion  that  no  leave  of  the  court 
for  a  -'-i.  fa.  was  necessary  again  I  members  for  the  time  being;  sec  also  Rickette 
v.  Bowhay,  where  Manle.  J..  :;  ('.  B.  '.me.  ami  CresBweU  J.,  id.  908,  expressed  tin 
same  opinion  :  Cn>.-s  v.  haw,  6  If.  A:  W.  223;  see  Wingfield  v.  Barton,  2  bowl.  N. 
ee  10  0.  B.  160  ;  L6  0.  B.  459. 

.  Warburg,  1  1  M.  k  W.  452  ;   Marion  v.  Lund,  16  Q.  B. 

(0)  Form  of  notice,  see  Clowes  v.  Brettell,  11  M.  k  W.  461.     Probably  the  no- 
ti<«-  ought  to  be  served  personally;  see  Esdaile  v   Smith,  L8  L.  J.,  Bxch.  120.    Di- 
i  of  court  in  granting  sci   I  eux  v.  Kilkenny,  4c,  Railway  Company, 

20  L.  J.,  Bxch.  3'j. 


COPARTNERSHIPS,    ETC.  355 

The  judgment  has  been  obtained  against  the  public  officer,  and  when, 
and  for  what  sum ;  how  much  is  due  on  the  judgment : 

The  executions  that  have  been  issued  on  the  judgment: 

The  means  to  levy  under  those  executions : 

Such  other  facts,  as  may  tend  to  induce  the  court  to  consider  due  dili- 
gence to  obtain  satisfaction  from  the  members  for  the  time  being  has 
been  used : 

When  the  contract  on  which  the  judgment  was  obtained  was  entered 
into,  or  when  the  same  was  executed,  as  the  case  may  require : 

That  the  party  proceeded  against  was  a  member  at  the  time  when  the 
contract  was  entered  into,  or  became  a  member  *at  any  time  be-  r=j,-n..-. 
fore  such  contract  was  executed,  or  was  a  member  at  the  date  of  L 
obtaining  judgment  :(c) 

The  creditor  of  banking  copartnerships  ought  to  bear  in  mind,  that 
though  he  is  not  bound  to  proceed  at  any  particular  time,  on  his  judg- 
ment, yet,  whenever  he  issues  his  execution,  he  ought  to  endeavour  to 
make  it  available  against  all  the  then  members  of  the  copartnership, [<l) 
as  a  general  rule. 

The  scire  facias  will  issue,  although  it  be  shown,  by  way  of  answer,  to 
the  application,  that  A.  B.,  who  is  supposed  to  be  in  solvent  circumstan- 
ces, who  has  ceased  to  be  a  member,  and  is  not  named  in  the  application, 
was  collusively,  and  fraudulently,  for  the  purpose  of  protecting  him  from 
liability,  permitted  to  transfer  his  shares ;  nor,  is  it  an  answer,  that  C. 
D.,  not  named  in  the  application,  but  still  a  member,  would,  if  execution 
went  against  him,  be  entitled  to  indemnity  from  solvent  persons,  though 
unable  himself  to  pay  the  sum  demanded ;  nor,  is  it  answer,  on  behalf 
of  E.  F.,  included  in  the  application,  that  judgment  is  entered  up  in 
respect  of  several  causes  of  action,  each  distinct  from  the  other,  for  one 
of  which  E.  F.  is  not  liable. (e) 

Also,  the  scire  facias  may  issue,  even  where  execution  has  not  gone 
against  all  the  existing  members,  previously  to  the  application. 

Thus,  if  execution  has  been  against  several  of  the  existing  members, 
with  no  satisfaction  obtained,  and  grounds  are  shown  to  convince  the 
court  of  the  insolvency  of  all  the  existing  members,  the  applicant  will 
not  be  obliged  to  issue  ^execution  against  the  remaining  existing  [-*^q9-i 
members,  but  will  be  allowed  to  issue  a  sci.  fa.  against  members,  L 
at  the  time  the  contract  was  made ;(/)  and,  so  he  will  be  allowed  to  pro- 
ceed by  sei.  fa.,  against  the  other  classes,  as  stated  above,  who  are  made 
liable  by  the  statute,  upon  his  satisfying  the  court,  in  like  manner,  that 
the  previous  executions  have  been  or  would  be  ineffectual.^) 

All  that  is  requisite  is,  that  a  sci.  fa.  should  issue  against  an  exii 

(c)  Bank  of  England  v.  Johnson,  3  Exch.  598 ;  Dodgson  v.  Scott,  2  Exch.  469, 
will  be  found  to  be  authorities  for  the  several  points  above  stated. 

(d)  Bank  of  England  v.  Johnson,  3  Exch.  598.  What  is  enough  to  make  out  a 
prima  facie  case  of  diligence,  Harvey  v.  Scott,  11  Q.  B.  92 ;  Field  v.  Mackenzie,  -l 
G.  B.  705.  As  to  fresh  application  for  sci.  fa.,  Field  v.  Mackenzie,  6  C.  B.  384 ;  on 
fresh  materials,  2  Exch.  457  ;  13  Q.  B.  344. 

(e)  Harvey  v.  Scott,  11  Q.  B.  92. 

(/)  Field  v.  M'Kenzie,  5  Dowl.  &  L.  172. 
(g)  Dodgson  v.  Scott,  2  Exch.  457. 


356         GRANT  ON  THE  LAW  OF  BANKING. 

member,  or  members,  and  that  there  should  bo  a  reasonable  certamt 
thai  :ill  remedies  against  the  rest  of  the  class  would  be  ineffectual ;  then 

the  application  for  a  sci.  fa.  against  another  class  may  be  entertained. 

Winn  a  rule  has  been  made  absolute  for  a  sci.  fa  ,  against  formet 
members,  the  court  will  refuse  to  set  it  aside,  on  the  ground  that  the 
party  obtaining  the  rule  had  omitted  to  disclose  to  the  court,  the  fact  of 
his  holding  the  collateral  security  of  a  mortgage  upon  real  property,  made 
and  assigned  to  the  bank,  which,  it  was  believed,  by  management  ami 

.  might  be  made  productive  of  an  amount  exceeding  the  mor? . 
debt;   but  no  present  means  of  obtaining  satisfaction  were  shown;  and, 
on  the  whole,  the  facts  not  being  such,  as  if  presented  to  the  court  on 
the  former  occasion,  would  have  sufficed,  to  disentitle  the  applicant  to 
the  writ  of  sci.  fa.(//) 

So,  in  the  case  of  any  other  collateral  security ;  for  instance,  if  the 
creditor  held  chattels  of  a  third  person,  with  a  power  of  sale,  it  seems  he 
would  not  be  obliged  to  exercise  that  power,  before  resorting  to  the 
members  of  the  second  class. (7) 

If  the  scire  facias  goes  against  a  person  who  was  a  member,  when  part 
r*"fm  0D^  °^  *^e  contracts  recovered  upon  were  *entered  into,  the 
l  J  court  would  probably  order,  that  there  should  be  an  express  un- 
dertaking entered  into  by  the  plaintiff,  not  to  levy  against  such  person, 
for  more  than  was  actually  due  from  him.(/.-) 

If  the  sci.  fa.  has  issued  without  leave  of  the  court,  in  a  case  where 

-ary,  and  if  it  is  ambiguous  on  the  face  of  it;  in  either 

case,  there  is  nothing  more  than  an  irregularity  to  be  taken  advantage 

of  on  motion,  which  must  be  made  promptly. (A     The  fact  is  no  defence 

in  a  plea.(?«) 

Where  the  application   is  for  a  sci.   fa.  against  retired  members,  the 

court   will  not  shorten  the  time  for  showing  cause  against  the  rule,  on 

round  that  the  three  years  limited  by  the  statute,  for  proceeding 

against  retired  members,  might  expire  before  execution  could  issue. (m) 

The  scire  facias  ought,  it  seems,  to  state  the  judgment  against  the 
public  officer,  to  have  been  for  a  debt  due  to  the  plaintiff  from  the  com- 
pany.(")  hut  there  is  no  obligation  to  aver,  that  the  company  was  actually 
carrying  on  business. (p\ 

The  scire  facias  against  one  who  was  a  member  at  the  time  of  tie 
contract,  probably  must  state  the  previous  execution  had  against  the 
mi  nil"  r-  :.t  the  time  of  the  execution,  for  such  previous  execution  [a  a 
condition  precedent  to  the  sci.  fa.  issuing  against  such  member,  and  is 
the  groundwork  and  warrant  for  it.(j)  Against  such  a  member  the 
court  will  allow  the  writ  to  issue  on  prima  facie  evidence,  that  he  was  a 


(h)  Field  F.Maekenaie,  t  •'.  B,  726.  (t)  Per  Wilde,  C.  J.,  4  C.  B.  730. 

(/.  i  Harvey  v.  Scbtt,  Jl  Q.  B.  '-'2  ;  see  Firth  v.  Harris,  8  Dowl.  089. 
(/,  Rickette  \.  Bowhay,  3  ('.  B.  389,  i  e.  before  plea.    Bradley  v.  Urquhart,  n 
.v  \v. 
(m)  Bradley  ▼.  Warburg,  11  M.  &  W.  452      ei      <\B.897. 

Id  \"  tl'Kenzie,  5  D.  &  L.  172.  (o)  Ness  v.  Fenwick,  2  Exch.  598. 

I    Ik-rtram,  4  Exch.  1  95. 
</i  Bank  of  England  v.Johnson,  18  L.  J.,  Excb.  238  ;  S.  C,  3  Exch.  598. 


0  OPART  NERSIIIPS,    ETC.  357 

member  at  the  time  of  the  contractor)  for  if  shown  to  have  been  once 
members,  they  will,  in  accordance  with  *the  general  rule,  be  r*zr\A-\ 
presumed  to  continue  so,  in  the  absence  of  proof  that  they  have  L  -" 
retired,  (s) 

The  defence  that  they  never  were  members,  or  that  they  had  ceased 
to  be  so,  before  the  contract  was  entered  into,  must  be  pleaded  to  the 
sci.  fa.(tf) 

Probably,  it  would  be  a  good  objection  against  allowing  the  sci.  fa. 
against  former  members,  to  show  that  there  was  property  of  the  bunk 
that  could  have  been  taken  under  a  sci.  fa.,(w)  but  not  so  to  show  that 
there  was  property  that  might  be  got  at  otherwise.(x) 

Any  objection  to  the  judgment  on  which  the  sci.  fa.  is  to  be  grounded, 
will  be  out  of  place,  as  an  answer  to  the  motion  for  the  sci.  fa.  If  it  is 
sought  to  impeach  the  judgment,  on  the  ground  of  fraud,  as,  for  instance, 
that  it  was  a  concocted  proceeding  to  the  prejudice  of  the  proprietors  of 
the  banking  company,  the  defendant  must  avail  himself  of  the  objection, 
either  in  the  form  of  a  plea  to  the  sci.  fa.,  or  in  the  form  of  an  applica- 
tion, specifically  for  the  purpose  of  setting  aside  the  proceedings  as 
fraudulently)  or  an  injunction  to  stay  proceedings  will  be  granted,  as 
it  seems,  by  the  courts  of  chancery. (2) 

Nor  does  the  objection,  that  the  application  has  been  made  before, 
apply,  it  would  seem,  in  cases  of  this  kind ;  for  the  general  rule,  that  a 
matter  cannot  be  agitated  twice,  does  not  appear  to  apply  to  cases  of 
motions  for  a  sci.  fa.,  in  cases  of  banking  copartnerships,  provided  the 
applicant  makes  his  renewed  motion  upon  fresh  materials  ;{a)  pr^-i 
and  *where  a  rule  to  issue  a  sci.  fa.  had  been  obtained  against  a  L  J 
former  member,  which  rule  had  been  afterwards  enlarged  and  subse- 
quently abandoned,  on  payment  of  costs  by  the  plaintiff,  he  was  after- 
wards allowed  to  come  to  the  court,  for  leave  to  issue  such  sci.  fa., 
although  there  was  no  explanation  offered,  why  the  first  rule  was  aban- 
doned, nor  any  new  facts  alleged  to  have  been  discovered  by  the  plaintiff,  to 
justify  him  in  making  his  second  application. (b)  It  will  be  observed, 
however,  that  on  the  former  occasion,  the  effect  of  what  took  place 
merely  was,  that  the  plaintiff  withdrew  his  application,  and  by  that  he 
was  not  bound,  as  he  would  have  been,  had  the  court  made  a  decision 
finally  disposing  of  the  rule. 

Also,  more  than  one  scire  facias  may  issue  at  the  same  time,  against 
different  members  severally,  and  it  is  not  an  objection  that  they  are  con- 

M  Field  v.  Mackenzie,  4  C.  B.  705. 

(«)  Harvey  v.  Scott,  11  Q.  B.  92;  see  14  M.  &  W.  11. 

(t)  Dodgson  v.  Scott,  2  Exch.  464;  see  11  M.  &  W.  4G1  ;  18  L.  J.,  Exch.  238. 
What  pleas  allowed,  Pbillipson  v.  Tempest,  8  Jur.  60. 

(u)  Per  Maule,  J.,  4  C.  B.  731 ;  and  see  15  C.  B.  462,  463  ;  16  Q.  B.  344. 

)x)  Per  Maule  and  V.  Williams,  Js.,  4  C.  B.  731,  732. 

\J)  Dodgson  v.  Scott,  2  Exch.  458  ;  see  6  Q.  B.  587  ;  11  Q.  B.  92  ;  15  Q.  B  548 
11  M  &  W.  432.  Defendant  cannot  plead  or  set  up  matter  that  might  have  been 
available  either  way  in  the  original  action,  Bradley  v.  Eyre,  11  M.  &  W.  432 ;  see 
6  Q.  B.  587  ;  2  Exch.  458. 

(z)  Bargate  v.  Shortridge,  5  H.  Lds.  297. 

(a)  Dodgson  v.  Scott,  2  Exch.  457. 

(}j  Dodgson  v.  Scott,  2  Exch.  457  ;  see  Field  v.  Mackenzie,  6  C.  B.  384. 


GRANT  ON  THE  LAW  OF  BANKING. 

current,(c)  and  unless  it  were  shown,  that  a  number  of  writs  were 
resorted  to,  for  purposes  of  oppression,  and  so  that  the  process  of  the 
court  was  abased,  the  court  will  not  interfere. (r)  But  the  rule  for  the 
Bci.  fa.  must,  in  all  cases,  be  served  person  a  lly,(c/)  except  where  the 
Bci.  fa.  issues  against  those  who  arc  members  for  the  time  being. (e) 

Exemptions  /nun  Liability. — On  inquiring  what  parties  connected 
with  the  partnership  are  liable  to  its  debts,  it  will  be  seen,  a  class  of 
]"  rsons  have  apparently  been  overlooked  by  the  legislature,  and  are  thcre- 
fore  exempt,  there  being  no  words  in  the  statute  to  comprehend  them, 
viz.,  persons  who  have  become  members  after  the  contract  was  completed, 
but  have  ceased  to  be  so  before  judgment  was  obtained,  though  they 
T*"On  were  so  at  *ne  commencement  of  the  *suit.  This  class  is  clearly 
L         -I  exempt  from  liability,  as  members  in  scire  facias. (/) 

Bankruptcy. — With  respect  to  bankruptcy,  it  is  to  be  observed,  that 
a  member  of  a  banking  copartnership  cannot  be  proceeded  against  in 
bankruptcy,  upon  a  debt  due  from  the  bank,  where  no  judgment  has 
been  obtained  against  the  public  officer,  although  the  business  has  been 
relinquished,  and  an  order  made  to  wind  up  the  company,  prior  to  the 
proceedings  in  bankruptcy;  and  the  same  is  the  case,  although  there  be 
not  any  public  officer  in  existence,^)  and  a.Jiat  in  bankruptcy  in  such 
case  would  be  invalid,  and  either  the  petitioning  creditor  or  the  messenger, 
would  be  liable  in  trover,  for  the  wrongful  seizure  under  it. 

A  shareholder  in  a  banking  copartnership,  after  the  bank,  &c,  had 
stopped  payment,  became  bankrupt,  afterwards  an  order  for  winding  up 
the  affairs  of  the  banking  company  was  made  under  the  Winding-up 
Acts.  Subsequently,  the  bankrupt  obtained  his  certificate,  and  his  name 
was  afterwards  included  in  the  list  of  contributories.  On  a  call  being 
afterwards  made  upon  the  shareholders,  the  official  manager  of  the  com- 
pany applied  to  prove  for  the  balance  due  from  the  bankrupt,  after 
debiting  him  in  the  company's  book  with  the  call,  and  it  was  held  he  had 
a  right  to  do  so,  and  that  the  proof  must  be  admitted, (/<)  for  that  a  call 
made  in  respect  of  shares,  which  the  bankrupt  held  before  his  bank- 
ruptcy, is  to  be  treated  for  every  purpose,  as  a  separate  debt  of  the  bank- 
rupt, in  the  administration  of  his  estate.  This  conclusion  was  arrived  at 
on  the  construction  of  the  Winding-up  Act  of  1849. (/) 

Besides,  the  modes  by  way  of  action  against  the  copartnership,  judg- 
r*-n--i  ment  thereon,  and  sci.  fa.  on  Buch  judgment,  by  *which  a 
L  '  J  creditor  of  the  copartnership  may  realize  his  debt  from  the  private 
funds  of  one  or  more  of  the  shareholders,  to  which  reference  has  been 
made  already, (/j  it  must  be  borne  in  mind,  that  the  proceeding,  by  way 

(r)  Nunn  v.  Li  h.  171  ;  see  id.  307;  2  id.  312;  Burmester  v.  Crofton, 

6  I».  <t  L.  430;  S.  C,  3  Exch.  397. 

Esdaile  v.  Smith.  18  L.  J.,  Exch.  120. 
Per  Maul'-.  J.,  3  0.  B.  900  :  per  CreaBwelL,  J.,  id.  908. 
D  dgsi  d  v.  Bcott,  2  Exch.  467;  see  11  M.  k  W.  432. 
Davison  v.  Farmer,  G  Exch.  242,  overruling  Kx  parte  Wood,  l  If,  D.  &  De 

! 
Ei  parte  Nicholas,  2  De  G.,  M.  &  G.  271. 
ii)   12  >v  L3  Vict  c.  108,  ss.  14,  30  ;  see  2  De  (•.  M.  &  G.  27G.  277 
3<     rapra,  pp.  501,  502. 


COPARTNERSHIPS,    ETC.  359 

of  trader  debtor  summons  against  a  shareholder,  may,  in  certain  circum- 
stances, (A  be  taken  under  the  Bankrupt  Law  Consolidation  Act  of  1849. 
To  enter  upon  this  subject,  however,  would  lead  to  much  more  detail, 
than  is  compatible  with  the  compendious  character  of  this  work,  as  useful 
information  could  not  be  conveyed,  except  by  placing  before  the  reader 
a  large  mass  of  statutory  enactments,  and  of  decisions  expounding  them. 
It  has,  therefore,  been  thought  best  to  refer  to  the  works  and  reports, 
which  treat  exclusively  of  bankruptcy,  where  the  proper  modes  of  taking 
advantage  of  the  bankrupt  laws,  in  cases  of  copartnerships  in  banking, 
under  7  Geo.  IV.  c.  46,  as  well  as  of  joint  stock  banking  companies 
stopping  payment,  &c,  will  be  found  laid  down  and  explained. (m) 

Insolvency. — On  the  insolvency  of  a  banking  copartnership,  one 
Walker,  a  principal  shareholder,  gave  bills  and  other  securities,  to 
another  bank,  to  cover  advances  made  by  that  bank,  for  the  payment  of 
the  creditors  of  the  copartnership ;  out  of  these  advances  the  creditors 
were  paid,  and  at  the  same  time  the  debts  were  assigned  by  the  creditors 
to  one  Richards,  as  trustee  for  Walker,  by  a  deed  reciting  the  above 
facts,  and  that  Richards  had  agreed  to  pay  the  amount  of  the  bills,  &c. 
on  having  an  assignment  to  him  t»f  the  debts.  One  of  the  original 
creditors  brings  an  action  for  Walker's  benefit,  against  certain  of  the 
shareholders,  to  recover  the  amount  of  his  debt :  the  defendants  pleaded 
payment ;  but  it  was  held  that  these  facts  did  not  support  the  plea ;  for 
payment  extinguishes  the  debt,  but  *the  parties  here,  by  the  r*5Qg-i 
assignment,  expressly  kept  alive  the  debt.(«)  ■-         -■ 

No  more  than  one  action,  or  suit,  for  the  recovery  of  the  same  demand, 
can  be  brought  against  the  copartnership,  in  case  the  merits  shall  have 
been  tried  in  such  action  or  suit.(o) 

Compromises. — Beyond  the  above  modes  of  proceeding,  it  may  be 
doubted  whether  there  are  any  available  for  creditors  or  shareholders. 
Compromises,  in  the  nature  of  composition  with  creditors,  seem  to  be 
inapplicable  to  relieve  shareholders  from  their  liabilities. 

A  banking  copartnership  having  stopped  payment,  certain  of  the 
shareholders  (who  afterwards  acquired  the  management  of  the  company's 
affairs,)  contributed  each,  in  proportion  to  the  number  of  shares  he  held, 
to  a  common  fund,  to  be  applied  to  the  protection  of  the  contributors  to 
it,  in  payment  of  the  debts  of  the  bank,  and  they  called  on  all  the  other 
shareholders  to  contribute.  This  some  of  them  refused  to  do,  upon 
which  an  arrangement  was  made  between  the  contributors  and  a  creditor 
of  the  company,  by  which  the  creditor  was  to  obtain  a  judgment  against 
the  company,  to  be  used  against  such  of  the  shareholders  as  the  contri- 
butors of  the  fund  should  select.  This  was  done,  the  company  gave  him 
judgment  by  confession,  and  the  creditor  issued  a  sci.  fa.  upon  the  judg- 

(7)  See  12  &  13  Vict.  c.  106,  ss.  77,  18. 

(m)  See  Flather's  Arckb.  Bank.,  11th  edit. ;  De  G.  Bank.  Reports  ;_De  G.,  M.  & 
G.  Bank.  Reports,  &c. 

(n)  M'Intyre  v.  Miller,  13  M.  &  W.  725  ;  see  Simpson  v.  Eggington,  24  L.  J., 
Exch.  313.  „    ,  _  a  . 

(o)  1  Geo.  IV.  c.  46,  s.  10,  and  1  &  2  Vict.  c.  96,  s.  2;  see  Barker  v.  Buttress,  7 
Beav.  141 ;  Steward  v.  Greaves,  10  M.  &  W.  720. 


360  GRANT    OH     THE     LAW     OF    BANKING. 

Hunt.  Bgainst  a  person  who  had  ba  d  b  Bhareholder,  but  before  the  date 
of  the  contraot  with  the  said  creditor,  oo  which  judgment  had  been  i 
rered,  had  assigned  his  Bhares  to  a  trustee  for  the  company,  but  the 
transfi  rs  were  informal.     The  Courts  of  Equity  regard  this  as  a  fraudu- 

-(||  ,  lenl  transaction,  and  will  restrain  the  creditor  *from  proceeding 
L  -I  at  law;(y/)  it  is  a  contrivance  to  enforce  indirectly  against  the 
-aid  person  the  contribution,  which  they  could  not  directly  impose  upon 
him.  The  Bouse  of  Lords,  in  a  case  subsequently  decided,  has  supported 
this  view.(^) 

Bank  Notes,  tfec. — Provision  is  made  for  tin-  issuing  and  re-issuing  b) 
these  bodies  of  bank  notes,  upon  Becurity  being  given  by  sect.  10,  but 
the  enactment  must  be  read  in  conjunction  -with  tin'  provisions  of  the 
Bank  Charter  Act,(r)  given  above.     Section  1G  provides  thus: — 

"  That  if  any  corporation  or  copartnership  carrying  on  the  trade  or 
business  of  bankers  under  the  authority  of  this  act  shall  be  desirous  of 
issuing  and  re-issuing  notes  in  the  nature  of  bank  notes,  payable  to  the 
bearer  on  demand,  without  the  same  being  stamped,  as  by  law  is  required, 
it  shall  be  lawful  for  them  so  to  do  on  giving  security  by  bond  to  his 
majesty,  his  heirs  and  successors,  ife  which  bond  two  of  the  directors, 
members  or  partners  of  such  corporation  or  copartnership  shall  be  the 
obligors,  together  with  the  cashier  or  cashiers,  or  accountant  or  account- 
ant-, employed  by  such  corporation  or  copartnerships,  as  the  said  Com- 
missioners  of  Stamps  shall  require;  and  such  bonds  shall  be  taken  in 
such  reasonable  sums  as  the  duties  may  amount  unto  during  the  period 
of  one  year,  with  condition  to  deliver  to  the  said  Cominissi'iiHTs  of 
Stamps,  within  fourteen  days  after  the  fifth  day  of  January,  the  fifth  day 
of  April,  the  fifth  day  of  July,  and  the  tenth  day  of  October,  in  even 
year,  whilst  the  present  stamp  duties  shall  remain  in  force,  a  just  ami 
true  account,  verified  upon  the  oaths  or  affirmations  of  two  directors, 
members  or  partners  of  such  corporation  or  copartnership,  and  of  tie- 
said  cashier  or  cashiers,  accountant  or  accountants,  or  such  of  them  as 
the  said  Commissioners  of  Stamps  shall  require,  such  oaths  or  affirma- 
tions to  be  taken  before  any  justice  of  the  peace,  and  which  oaths  and 
affirmations  any  justice  of  the  peace  is  hereby  authorized  and  empowered 
to  administer,  of  the  amount  or  value  of  all  their  promissory  notes  in 
circulation  on  some  given  day  in  every  week,  for  the  space  of  one 
quarter  of  a  year  prior  to  the  quarter  day  immediately  preceding  tin 
delivery  <>f  such  account,  together  with  the  average  amount  or  value 
thereof,  according  to  such  account,  and  also  to  pay  or  cause  to  be  paid 
into  the  hand-  of  the  Recei vers-( Seneral  of  Stamp  Duties  in  Great 
Britain,  as  a  composition  lor  the  duties  which  would  otherwise  have 
been  payable  for  Buoh  promissory  notes  issued  within  the  Bpace 
of  one  year,  the  sum  of  seven  shillings  for  <  very  one  hundred 
pounds,  ami  al-o  for  the  fractional  pari  of  one  hundred  pounds  of  the 
said  avi  rage  amounl  or  value  of  such  notes  in  circulation,  aocording  to 
the  true  intenl  ami  meaning  of  this  acl  :  and  on  due  performance  thereof, 

(p)  Taylor  v.  Hughes,  J  Jo.  ft  La*.  '-'1. 

'      .£      rtridge,  5  II    Lds.  291  I  ft  B  Vict.  c.  32. 


[*510] 


COPARTNERSHIPS,    ETC.  361 

such  bond  shall  be  void,  and  it  shall  be  lawful  for  the  said  commissioners 
to  fix  the  time  or  times  of  making  such  payment,  and  to  specify  the  same 
in  the  condition  to  every  such  bond,  and  every  such  bond  may  be 
required  to  be  renewed  from  time  to  time  at  the  discretion  of  the  said 
commissioners  or  the  major  part  of  them,  and  as  often  as  the  same  shall 
be  forfeited,  or  the  party  or  parties  to  the  same  or  any  of  them  shall  die, 
become  bankrupt  or  insolvent,  or  reside  in  parts  beyond  the  seas."(r) 

Any  of  these  bodies  beginning  to  issue  bills  or  notes,  or  to  borrow, 
&c,  before  making  the  returns,  &c,  above  mentioned, (.s)  are  to  forfeit 
500?.  for  each  week  that  they  neglect  to  make  them,  by  section  18, 
thus  : — 

"  That  if  any  such  corporation  or  copartnership  exceeding  the  number 
of  six  persons  in  England,  shall  begin  to  issue  any  bills  or  notes,  or  to 
borrow,  owe  or  take  up  any  money  on  their  bills  or  notes,  without  having 
caused  such  account  or  return  as  aforesaid  to  be  made  out  and  delivered 
in  the  manner  and  form  directed  by  this  act,  or  shall  neglect  or  omit  to 
cause  such  account  or  return  to  be  renewed  yearly  and  every  year  between 
the  days  or  times  hereinbefore  appointed  for  that  purpose,  such  corpora- 
tion or  copartnership  so  offending  shall,  for  each  and  every  week  they 
shall  so  neglect  to  make  such  account  and  return,  forfeit  the  sum  of  five 
hundred  pounds ;  and  if  any  secretary  or  other  officer  of  such  corporation 
or  copartnership  shall  make  out  or  sign  such  false  account  or  return,  or 
any  account  or  return  which  shall  not  truly  set  forth  all  the  several  parti- 
culars by  this  act  required  to  be  contained  or  inserted  in  such  account 
or  return,  the  corporation  or  copartnership  to  which  such  secretary  or 
other  officer  so  offending  shall  belong  shall  for  every  such  offence  forfeit 
the  sum  of  five  hundred  pounds,  and  the  said  secretary  or  other  officer 
so  offending  shall  also,  for  every  such  offence,  forfeit  the  sum  of  one 
hundred  pounds  ;  and  if  any  such  secretary  or  other  officer  making  out 
or  signing  any  such  account  or  return  as  aforesaid  shall  knowingly  and 
wilfully  make  a  false  oath  of  or  concerning  any  of  the  matters  to  be 
therein  specified  *and  set  forth,  every  such  secretary  or  other  p^-p 
officer  so  offending,  and  being  thereof  lawfully  convicted,  shall  L  J 
be  subject  and  liable  to  such  pains  and  penalties  as  by  any  law  now  in 
force  persons  convicted  of  wilful  and  corrupt  perjury  are  subject  and 
liable  to." 

Accountable  Receipt. — A  banking  copartnership,  established  under 
the  stat.  of  Geo.  IV.,  in  acknowledgment  of  moneys  deposited  with  them 
by  a  customer,  gave  two  accountable  receipts  for  100?.  each,  signed  by  a 
clerk  for  the  company ;  the  course  of  dealing  being,  that  the  parties  to 
whom  the  receipts  had  been  given,  returned  them  to  the  bank  once  a 
year,  to  be  cancelled,  when  they  were  paid,  or  allowed  the  interest,  for 

(r)  See  as  to  issuing  notes,  7  &  8  Vict.  c.  32,  s.  13,  supra,  p.  441 :  and  same 
section  as  to  amount  of  notes  allowed  to  be  in  circulation. 

(«)  See  supra,  pp.  460,  463  ;  see  also  infra,  cap.  xvi.,  for  the  penalties,  &c,  for 
neglect  in  this  respect.  N.  B.  Public  officers  indemnified  in  all  cases  by  7  Geo. 
IV.  c.  46,  s.  1-1 ;  these  bodies  not  required  to  take  out  more  than  four  licenses,  s. 
17  ;  see  supra,  p.  446.  Penalties,  &c,  to  be  recovered  in  the  Court  of  Exchequer, 
&c,  s.  21.  Forgery  of  bank  notes  of  these  bodies,  7  Geo.  IV.  c.  46,  s.  9;  see  1 
Welsby  &  Beav.  Statutes,  153  ;  2  id.  Crim.  Law,  (227). 


362  G  8  A  N  I    0  N    THE    LA  W    0  F    B  ANKI  N  G. 

the  pa-t  year,  ami  took  receipt-  in  jilace  of  those  which  wore  delivered 
up.  After  the  death  of  the  customer,  and  pending  a  contest  for  the  ad- 
ministration of  his  estate,  the  receipts  came  into  the  hands  of  a  stranger, 

who  fraudulently  obtained  pawncnt  for  them  i'ruin  the  bank,  when  the 
receipts  were  given  up  and  oanoelled,  by  tearing  off  the  signature.  The 
administrator  recovered  in  equity  the  whole  sum  from  the  company,  with 
interest  and  costs  of  suit.(/)  Nothing  that  had  taken  place  had  availed 
to  absolve  in  equity  the  company  from  their  original  liability  to  pay  tin- 
debt,  of  which  the  receipts  were  evidence. 

Contracts  with  Company. — Where  an  act  of  parliament,  establishing 
a  railway,  gas  company,  or  other  public  body,  enacts,  that  no  person  con- 
cerned, or  interested,  in  any  contract  with  the  company,  or  public  body, 
shall  be  capable  of  being  chosen  a  director  of  the  company  or  public 
body,  and  that  if  any  director  shall  be  directly  or  indirectly  concerned 
in  any  contract,  &c,  he  shall  thereupon  be  immediately,  &c,  discharged 
from  the  direction  :  this  does  not  affect  directors  who  are  members  of  a 
r*„9T  banking  copartnership,  *being  the  bankers  and  treasurers  of  the 
L  "J  company,  or  public  body.(«)  In  such  cases  the  contract  meant, 
is  a  contract  with  the  company,  or  public  body,  in  the  execution  of  its 
enterprize. 

Buying  out  Shareholders. — In  equity,  and  at  law  equally,  it  is  said, 
that  there  is  nothing  in  the  act  of  parliament  to  prevent  the  company 
from  buying  out  a  member;  and  where  a  transfer  of  shares  is  made  by  a 
member  to  the  company,  the  latter  may,  as  between  themselves  and  the 
shareholder,  and  other  parties  (if  any)  to  the  transfer,  dispense  with  the 
machinery  which  is  prescribed  by  the  statute  for  transfers  in  general, 
and  that  the  company,  in  such  case,  will  not  be  allowed  afterwards  as 
between  themselves  and  the  partner,  with  whom  they  contracted,  to  im- 
peach the  tran-.-n -tioii.c 'a )  there  being  nothing  in  the  deed,  expressly  or 
constructively,  forbidding  it ;  and  the  practice  having  been  for  the  com- 
pany, or  the  directors  on  their  behalf,  to  deal  in  this  way  with  the  shares, 
it  having  been  done  openly,  never  condemned  by  any  general  meeting, 
and  in  one  case  directly  authorized  by  such  a  meeting;  Sir  K.  Sugden, 
in  deciding  a  case  of  this  kind  in  Ireland,  referred  to  it  as  (t  a  rule  always 
acted  upon,"  in  common  partnerships,  that  although  articles,  which  had 
been  agreed  on  to  regulate  partnership,  could  not  be  altered  without  the 
consent  of  aU  the  partners,  if  alterations  were  made  by  some  of  the  part- 
ners, and  acquiesced  in  by  all,  that  was  an  adoption  of  the  new  terms.(y) 
r*--iq-i  J  Jut  though  there  is  nothing  to  prevent  the  buying  out  of  *a 
L  'J  dngle  member,  in  the  act  of  parliament,  it  may  frequently  be  in- 
consistent with  the  tenn-  of  th<  deed  of  Si  ttlt  m<  nt  to  do  so ;  at  all  events 
to  allow  a    dissentient    IhhIi/  of  shareholders  to   retire    upon  a  pecuniary 

(i)  Pearce  7.  Creswick,  2  Bare,  286.     Bo  if  the  company  had  obtained  the  re- 

i  then  refused  to  pay,  Bee  2  W.in-.  289,  a.,  290,  a., 297. 
(u)  Sheffield,  4c,  Railway  Company  v.  Woodcock,  7  M.  &  W.  574. 

Taylor  t.  Hughes,  2  Jo.  .v  L.  21.  The  Bame  al  law,  Cheltenham  Railway 
Company  v.  Daniel,  2  Railw.  Cas.  728  ■  and  lee  per  Ld.  St.  Leonards,  C,  22  L.  J., 
Chanc.  203. 

Per  Sugden,  <'..  Ir..  2  Jo.  &  L.  53  :  Const  7.  Earris,  Turn,  k  R.  517  ;  sec  Ex 
!       kG.  236]  Bargate  v.  Shortridge,  5  H.  Lds.  297. 


COPARTNERSHIPS,    ETC.  363 

consideration,  &c,  has  been  held  (as  we  shall  see)  to  be  ultra  vires  of 
the  directors,  in  certain  circumstances ;  and  all  propositions  of  this  nature 
ought  to  be  looked  at,  with  reference  to  the  terms  of  the  deed,  in  order 
to  see  whether  they  permit  of  the  application  of  the  company's  funds  to 
purposes  of  this  nature. 

The  deed  ought  to  contain  strong  and  carefully-expressed  clauses,  for- 
bidding such  proceedings  altogether. 

General  Meetings. — It  has  been  repeatedly  pointed  out  to  be  in  general 
beyond  the  powers  of  a  general  meeting  of  shareholders,  to  alter  the  ob- 
jects of  the  copartnership  ;  to  divert  its  funds  to  objects  other  than  those 
contemplated  in  its  deed  of  constitution  ;  in  short,  it  is  beyond  their  com- 
petence to  do  anything  that  is  to  be  valid  and  binding  on  the  company, 
if  it  is  not  within  the  common  contract  which  unites  the  partnership ; 
but  the  same  strictness  does  not  appear  to  be  applicable  to  matters  nojfc  in 
themselves  of  an  essential  character;  even  where  the  deed  by  its  terms 
seems  expressly  to  exclude  alteration ;  thus,  where  a  deed  ordained  that 
the  directors  should  never  consist  of  more  or  fewer  than  sixteen,  but  also 
gave  power  to  a  special  general  meeting,  "  called  for  the  purpose,  from 
time  to  time,  to  amend,  alter,  or  annul,  either  wholly  or  in  part,  all  or 
any  of  the  clauses  of  the  said  deed,  or  of  the  existing  regulations  and 
provisions  of  the  company,  and  to  make  any  new  or  other  regulations, 
&c,  such  regulations,  alterations,  or  annulment,  if  confirmed  by  a  subse- 
quent special  general  meeting,  &c,  to  be  binding  and  conclusive  upon 
the  proprietors:"  and  at  a  special  general  meeting  the  number  of  direc- 
tors was  reduced  from  sixteen  to  seven,  and  this  resolution  was  duly  con- 
firmed by  a  subsequent  special  general  meeting.  This  change,  pg-^-i 
it  *was  held,  the  powers  of  a  special  general  meeting,  by  the  L  J 
constitution  of  the  company,  enabled  them  to  effect,  (z) 

Resolutions,  ex.  gra.,  for  altering  the  shares  and  capital  of  a  company, 
may  be  illegal,  and  yet  not  have  the  effect  of  dissolving  the  company. (a) 
Manager. — A  manager  may  carry  on  a  separate  business,  as  a  merchant 
or  otherwise,  by  permission  of  the  company ;  so  doing,  he  is  not  entitled 
to  give  himself  the  same  accommodation,  in  respect  of  his  separate  trade, 
which  he  might  obtain  from  an  independent  bank.  It  would  be  neces- 
sary for  him,  in  order  to  support  such  a  proceeding,  to  show  that  he  had 
brought  the  whole  transaction,  in  all  its  parts,  most  fully  before  the  direc- 
tors ;  it  would  not  be  enough  to  show  merely  that  he  had  not  concealed 
any  thing  j  such  a  proceeding,  if  the  whole  had  been  brought  before  the 
directors,  and  had  been  assented  to  by  them,  might  be  permitted  to 
stand,  but  only  in  that  caso.(&) 

The  manager  of  a  banking  copartnership  then  has  no  right  to  give 
himself  accommodation  out  of  the  funds  of  the  bank,  without  the  consent 
of  the  directors,  given  with  a  full  knowledge  of  all  the  circumstances. 
This,  however,  though  it  will  prevent  the  company  from  repudiating  the 

(2)  Smith  v.  Goldsworthy,  4  Q.  B.  430:  see  per  Coleridge,  J.,  16  Q.  B.  295; 
296. 

la)  4  Q.  B.  431.  _  _, 

\b)  Gwatkin  v.  Campbell,  1  Jur.  (N.  S.)  Chanc.  131 ;   compare  Reg.  v.  Evans, 

supra,  p.  269. 


G  B  a  S  I    0  H    1  II  E    L  A  \v    Of    ii  a  X  K  I  N  G. 

transaction,  will  in  many  oases,  as  of  course,  fail   to  save  then  from 
loss. 

Thus,  where  A.  was  a  manager  of  a  branch  bank,  and  also  executor 
of  a  testatrix,  who  had  lent  1,5002.  on  the  security  of  a  certain  ship.  A. 
afterwards  shifted  the  security  from  this  ship  to  another  ship,  and  further, 
iu  his  character  of  executor,  borrowed  a  sum  of  money,  1,6002.,  from 
r*-i-T  *tue  bank,  and  also  lenl  it  to  the  owner  of  the  latter  ship,  and 
L  J  took  a  mortgage  of  thai  ship,  for  the  1,5002.  lent  by  the  testa- 
trix, and  also  for  1,6002.,  which  he  had  lent  as  executor.  Then,  as  secu- 
rity tor  the  money  lent  to  him  by  the  bank,  he,  several  months  alter  the 
advance  by  the  bank,  assigned  to  them  this  mortgage,  and  the  mortgage 
debts.  The  last-mentioned  ship  was  sold  tor  1,1502.,  ami,  in  a  suit  by 
the  residuary  legatees  of  the  testatrix  against  A.  and  the  bank  for  the 
recovery  of  this  sum,  the  executor,  it  was  held,  had  no  right  to  pledge 
the  assets;  but  as  the  executor  was  also  agent  of  the  bank,  the  bank 
must  be  considered  as  having  notice  of  his  inability  to  pledge  the  assets, 
and  could  stand  in  no  better  position  than  he  did,  but  the  legatees  were 
entitled,  iu  preference  to  the  bank,  to  the  l,1502.,(c)  and  the  bank  having, 
iu  fact,  already  received  this  1,150/.,  were  charged  with  interest  on  it  at 
4/.  per  cent.,  during  the  period,  since  they  had  received  it,  to  the  day  of 
the  final  decree. 

The  manager  of  a  banking  copartnership,  which  stopped  payment  in 
January,  l^lti,  indorsed  a  bill  of  exchange  dated  London,  May  14,  1846, 
in  this  way — 

"  l'<  r  proc.   Newcastle-upon-Tyne  Joint  Stock    Banking   Company, 
II.  Bleckley,  Manager." 

The  plaintiff  proved  that  he  was  holder  of  the  bill  for  value,  having 
ed  it  from  the  drawer,  who  had  drawn  the  bill,  it  was  suggested 
for  his  own  accommodation,  and  had  indorsed  it  to  Bleckley,  who  had 
indorsed  it  aa  above,  then  redelivered  it  to  the  drawer.  The  action  was 
against  the  public  officer  of  the  above  named  company.  It  was  con- 
tended that  tin'  manager's  authority  to  indorse,  &c.,  was  at  an  end  on 
the  stoppage  of  the  bank,  but  the  court  dealt  with  the  case  as  if  the  bank 
had  cot  suspended  payment.  Other  bills  were  produced,  indorsed  in  the 
Same  way,  one  before,  and  the  other  after  the  bank  stopped,  upon  which 
r+-,  .-,     aetimis    had   also   been    brought,  and  which    had    been    paid   by 

L  ol  '-J  the  bank. 

The  court  considered  the  evidence  u>  show  that  every  bill  that  was 
■  led  nr  indorsed  by  Bleckley,  the  manager,  was  accepted  or  Indorsed 
in  tin:  above  manner  by  procuration  ;  tin'  legal  effect  of  which  is,  an  ex- 
intimation  to  every  one,  that  the  acceptance  or  indorsement  was  done 
under  a  special  nr  limited  authority,  binding  every  one,  therefore,  to  as- 
certain  before  they  took  the  bill,  that  the  indorsement  was  agreeable  to  the 
authority  given,  according  to  a  well-known  rule  respecting  all  Buoh  accept- 
ances or  indorsements.  A  party  taking  such  a  bill,  therefore,  without 
inquiry,  if  it  turns  nut  that  the  party  indorsing  exceeded  his  authority, 
be  must  Buffer  for  his  temerity;  ami  the  jury  found  that  the  manager 

Lister,  :l'<  L.  .1..  Ghana  38  ;  8.  <".. '-'"  Bcav.  366.    As  to  man 
for  percentage  or  i  ommission  against  the  company,  Law  v.  Thompson.  15  M. 

A  w. 


COPARTNERSHIPS,    ETC.  305 

had  not  authority  to  indorse  in  this  case ;  the  bank  had  a  verdict,  which 
was  upheld  by  the  court.  (fZ) 

A  promissory  note,  to  secure  an  account  at  the  branch  bank  at  Bir- 
mingham, of  the  banking  copartnership,  called  the  National  Provincial 
Bank  of  England,  was  given  in  this  form  : — 

"£1,000.  "Birmingham,  Mm-ch  24,  1836. 

"  Three  months  after  date  we  promise  to  pay  to  the  manager  of  the 
National  Provincial  Bank  of  England  the  sum  of  one  thousand  pounds. 

"A.  B. 
"C.  B. 
"E.  F." 
At  this  time  the  National  Provincial  Bank  of  England  carried  on  busi- 
ness, as   well  in  other  places  as  in  Birmingham,  by  means  of  branch 
banks,  but  having  a  general  board  of  management  at  London,  under  a 
board  of  directors,  at  which  Bobertson  was  manager.     Elrich  was  the 
local  manager  at  Birmingham. 

*In  an  action  against  A.  B.  and  C.  D.  on  this  note  by  Robert-  pg^-i 
son,  who  declared,  as  manager  of  the  National  Provincial  Bank  L  '  J 
of  England,  not  styling  himself  public  officer,  it  was  objected,  that  the 
action  should  be  brought  by  the  bank,  suing  by  their  public  officer ;  but 
it  was  ruled  by  the  learned  judge,  that  the  facts  stated  were  distinct 
evidence  to  go  to  the  jury,  that  the  plaintiff  was  the  manager  intended 
in  the  note,  and  that  it  was  not  open  to  the  defendants  to  contend  that 
the  bank  ought  to.  have  sued  by  its  public  officer,  and  the  judgment  was 
against  the  defendant. (e) 

An  instrument,  in  the  form  of  a  bill  of  exchange,  drawn  by  the 
manager  of  a  branch  bank,  by  order  of  the  directors,  on  the  head  office, 
but  expressed  in  the  body  of  it  thus,  "  pay  without  acceptance/'  may  be 
declared  upon,  as  a  promissory  note,  and  any  of  the  directors  may  be 
sued  as  maker  by  the  indorsee.  (/) 

On  an  indictment  for  forging  a  bill  of  eschange,  the  instrument,  as 
set  out,  was  in  this  form  : — 

"Flintshire  District  Banking  Company, 
«  Flint,  29th  Sept.,  1837. 
«  Twenty-one  days  after  date,  pay  (without  acceptance)  to  the  order  of 
Mr.  James  Henderson,  £70. 

"For  value  received  for  the  company, 

"  J  WATKINS,  Manager. 
"  To  the  London  and  Westminster  Bank." 
And  it  was  considered,  at  Nisi  -Prius,  to  be  properly  described  as  a  bill 
of  exchange.  (#) 

The  public  officer  is  not  necessarily  manager  of  the  affairs  of  the  co- 
partnership ;(h)  one  person,  however,  may  discharge  both  duties;  whether 

(d)  Alexander  v.  Mackenzie,  6  C.  B.  766;  per  proc.  usually  implies  authoriza- 
tion by  power  of  attorney. 

(e)  Robertson  v.  Sheward,  1  M.  &  Gra.  511. 
(/)  Miller  v.  Thomson,  3  M.  &  Gra.  576. 
(g)  Reg.  v.  Kinnear,  2  Moo.  &  R.  117. 

(A)  6  C.  B.  766;  see  1  M.  &  Gra.  511. 


366  GRANT    ON    THE    LAW    OF    BANKING. 

in  anv  given  case  that  is  so  or  not,  must  depend  in  general,  upon  tlie 
terms  of  the  deed  of  settlement,  which  also  is  the  source  to  ascertain 

r*"iQH  whether  *any  act  is  within  the  authority  or  not,  of  the  manager, 
L  ""-I  or  public  officer.  What  i^  the  authority  and  the  extent  of  it.  is 
a  question  of  fact,  and  the  answer  is  to  he  sought  for  in  the  deed  of  set- 
tlement, in  the  first  instance;  if  that  is  silent  on  the  subject,  then 
evidence  of  what  acts  are  usually  performed  by  managers,  or  what  acts 
the  manager  of  the  particular  company  lias  been  used  to  perform,  as  the 
case  may  be,  mnst  be  resorted  to. 

It  will  probably  be  most  convenient  to  define  in  the  deed  of  settlement, 
as  carefully  and  fully  as  possible,  what  are  the  duties  and  powers  with 
which  the  shareholders  entrust  the  manager,  especially  as  regards  exter- 
nal acts,  such  as  the  extent  to  which,  and  the  form  in  which,  the  manager 
shall  be  empowered  to  bind  the  company  by  accepting  or  indorsing  bills, 
taking  up  loans,  &c. 

Generally,  with  respect  to  the  character  and  liabilities  of  the  situation 
or  office  of  manager  of  a  banking  copartnership,  it  is  obvious  that  the 
situation  of  manager  is  one  of  high  trust,  but  the  trust  becomes  still 
greater,  and  the  responsibility  much  enhanced,  in  case  of  a  local  manager 
of  a  branch  establishment  of  the  bank.  For  many  purposes  he  is  looked 
upon  by  the  law,  and  is  treated  as  if  he  were  the  whole  body,  whom  he 
has  power  to  bind  even  by  his  tortious  act,  although  he  may  not  be  a 
partner. 

Fur  instance,  if  a  local  manager  of  a  branch  bank  gets  into  his  hands 
the  money  of  a  customer  of  the  bank,  by  inducing  the  customer  to  con- 
sider that  he  is  acting  in  the  transaction  as  agent  of  the  bank,  and  is 
invested  with  authority  to  effect  the  purposes  for  which  the  customer 
confides  the  money  to  him,  and  then  appropriates  the  money  to  his  own 
purposes,  the  customer's  loss  will  fall  upon  the  copartnership.  To  hold 
the  bank  not  to  be  liable  in  such  case,  would  be,  it  has  been  Baid.  to 
hand  over  the  public  to  the  mercy  of  the  clerks  employed  by  these  banks. 
The  principle  seems  to  be,  that  the  manager  is  a  servant,  whom  the 
0  bank,  for  the  purposes  of  their  trade,  virtually  accredit  and  hold 
L  J  out  to  the  world  as  invested  by  them  with  genera]  authority  to 
act  for  them  in  the  affairs  of  the  branch  bank;  and  the  public  have  no 
power  or  means  to  discriminate  what  is,  and  what  is  nut,  in  any  parti- 
cular case,  within  the  legitimate  scope  of  the  agent's  powers,  or  in 
accordance  with  the  directions  of  his  masters;  and,  therefore,  when  a 
customer, 'in  a  matter  belonging  to  his  relations  with  the  branch  bank, 
confides  in  the  servant,  he,  in  fact,  trusts  the  masters,  and  they  are 
liable  accordingly  for  the  fraud  of  the  servant  whom  they  have  chosen. (t) 

That  the  manager  of  a  branch  bank  musl  necessarily  have  a  larger 
authority  than  usually  attache-  to  agents,  is  aj. parent  from  this:  an 
agent,  in  general,  has  no  authority  implied  by  law,  and,  independent!] 
of  his  particular  instructions,  to  borrow  money  for  the  service  of  his 
principals  in  the  business  he  conducts  for  them;  to  obtain  deposits,  that 

(■')  Thompson  v.  Bell,  10  Bxch.  11  ;  sec  Pickering  v.  Bosk,  15  Bast,  53.    The 
_,r  i-  not  the  agent  of  the  shareholders  to  commit  a  fraud,  see  Bernard's 

:  and  see  3  Ue  G.  k  8.  90, 


COPARTNERSHIPS,    ETC.  3G7 

is,  to  obtain  loans  of  money  for  his  employers,  is  one  principal  part  of 
the  business  of  a  manager  of  a  branch  bank;  his  power,  in  this'respect 
is  unlimited;  and  thus  he  makes  them  responsible  for  every  shilling 
which  he  receives  from  a  customer  of  the  bank. 

So,  if  he  advances  money  on  loan,  the  loss,  if  any,  must  fall  on  the 
shareholders  of  the  bank  :  thus,  in  a  case  where  the  manager  of  a  branch 
bank  had  advanced  money  to  the  agent  of  a  mining  concern,  to  pay  the 
wages  of  the  labourers  in  the  mine,  which  were  in  arrear,  and  for  which 
they  had  obtained  warrants  of  distress  upon  the  materials,  &c,  in  the 
mine,  the  copartnership  of  the  bank  were  unable  to  recover  the  amount 
of  the  advances,  by  action,  against  a  shareholder  in  the  mine,  on  the 
ground  that  an  agent,  in  general,  has  no  implied  authority  to  borrow 
money  for  the  service  of  his  employers,  and  there  was  no  evidence  of  any 
special  authority  having  been  given  by  the  shareholders,  although  the 
money  *had  been  duly  applied,  in  payment  of  the  wages  due  r*59Q-j 
from  the  shareholders  to  the  labourers.  (/c) 

In  respect  of  any  contract,  into  which  the  manager  might  enter,  on 
behalf  of  the  branch  bank,  provided  it  fell  within  the  usual  course^  of 
banking  business,  although,  under  the  deed  of  settlement,  or  otherwise, 
the  manager  might  be  restricted  from  entering  into  contracts  of  that 
particular  class,  there  being  no  proof  that  the  party,  with  whom  the  con- 
tract was  entered  into,  was  cognizant  of  the  restriction,  the  copartnership 
would  be  liable.(Z)  Then,  as  to  the  course  of  banking  business,  there  is 
no  doubt,  that  the  nature  of  the  business  of  bankers  is  part  of  the  law 
merchant,  and  is  to  be  judicially  noticed  by  the  courts. (m) 

Branch  Banks. — A  branch  bank  is  considered,  for  some  purposes,  as 
a  distinct  establishment,  from  every  other  branch  of  the  concern.  Thus, 
where  a  bill  of  exchange  was  indorsed  to  a  Branch  Bank  of  the  "  National 
Provincial  Bank  of  England,"  established  at  A.,  who  sent  it  to  another 
branch,  established  at  B.,  who  indorsed  it  to  the  head  establishment,  in 
London,  it  was  held,  in  an  action  upon  the  bill,  by  the  indorsee  against 
the  drawer,  that  each  of  the  branch  banks  were  to  be  considered  as 
independent  indorsees,  and  each  entitled  to  the  usual  notice  of  dis- 
honour.^) 

Bankruptcy. — In  addition  to  what  has  been  stated  above,  on  the  sub- 
ject of  bankruptcy,  it  seems  proper  to  add  some  observations  here. 

That  bankers,  as  such,  are  liable  to  the  bankrupt  laws,  has  already 
been  stated ;  it  has  also  been  pointed  out,  that  a  *person,  attempt-  r*52;n 
ing  to  make  himself  liable  to  those  laws  by  the  purchase  of  shares  L 
in&a  banking  copartnership,  will  not  be  allowed  to  obtain  the  advantages 
that  he  proposed  to  himself;  on  the  other  hand,  a  man  cannot  escape 
from  the  effect  of  the  bankrupt  laws,  as  to  the  whole  of  his  property,  by 
showing  that  his  only  trading  property  is  comprised  in  shares  in  a  bank- 

(k)  Hawtayne  v.  Bourne,  7M.&W.  595. 

(I)  Hawken  v.  Bourne,  8  M.  &  W.  709;  see  Ex  parte  Chippendale,  4  De  (*.,  M.  & 

G    19 
\m)  Per  Ld.  Campbell,  6  Moo.  P.  C.  173,  referring  to  Brandao  v.  Barnett,  12 

Cla.  &F.  787.  ...    ... 

(n)  Clode  v.  Bayley,  12  M.  &  W.  51 ;  and  see  further  supra,  pp.  415,  416. 

March,  1857.-25 


GRANT  ON  THE  LAW  OF  BANKING. 

Partnership.     An  act  of  bankruptcy  may  be  committed  by  a  person, 

whose  sole  trading  property  consists  of  two  shares  in  a  bank,  (worth  Lea 
than  '20/.  each,)  conveying  all  his  other  property  to  a  creditor,  to  secure 
a  debt,  although  the  two  shares  were  not  conveyed,  and  although  the 
conveyance  did  not  operate  to  stop  the  trading  as  a  banker.(o) 

It  seems  material  to  notice  this  decision,  because  various  cases  are  to 
be  found. (/»)  from  which  the  law  would  appear  to  have  been  laid  down, 
without  qualification,  that,  in  order  to  render  an  assignment  of  a  trader's 
effects  an  act  of  bankruptcy,  it  must  be  shown,  that  the  party  assigned 
all,  or  so  nearly  all,  of  his  effects,  as  to  put  it  out  of  his  power  to  carry 
on  the  trade,  and,  ex  converso,  deeds  of  assignment  have  been  held  not 
to  be  acts  of  bankruptcy,  because  they  did  not  convey  all  the  trader's 
property,  (q) 

But  the  deed,  in  the  above  case,  was  held  to  be  an  act  of  bankruptcy, 
because  its  necessary  consequence  was  to  delay  creditors, — the  person  in 
question  had  many  private  creditors, — and,  as  every  one  must  be  taken 
to  intend  the  necessary  consequences  of  his  own  acts,  the  deed  of  assign- 
ment was  considered  to  have  been  made  with  that  intent,  and,  therefore, 
to  be  an  act  of  bankruptcy  under  the  67th  section  of  the  Bankrupt  Act, 
which  makes  acts  done  with  intent  to  delay  creditors — not  saying  trade 
[-*-■> ■>-]  creditors — acts  of  bankruptcy.  *The  smallness  of  the  property, 
L  J  in  respect  of  which  the  party  is  a  trader,  makes  no  difference, 
for  there  cannot  be  one  rule  of  law,  when  a  man  is  a  trader  to  a  trifling 
amount,  and  another  where  his  trade  dealings  are  large. 

Six  persons  are  copartners  in  a  bank ;  two  of  them  carry  on  a  separate 
business  as  ironmongers;  on  a  commission  of  bankruptcy  issuing  against 
the  partners  in  the  banking  house,  it  appeared  that  a  sum  of  8,2222.  was 
due  from  the  bank  to  the  ironmongers'  firm,  in  respect  of  moneys  pro- 
cured for  the  benefit  of  the  bank,  on  the  credit  of  the  indorsement,  by 
the  ironmongers'  firm,  of  bills  drawn  by  the  banking  firm,  which,  upon 
the  credit  of  such  indorsement,  had  been  discounted  by  the  Bank  of 
England. 

Now,  the  rule  is,  that  a  partner  in  a  firm,  against  which  a  commission 
of  bankruptcy  issues,  shall  not  prove  in  competition  with  the  creditors  of 
the  firm,  who  are,  in  fact,  his  own  creditors,  shall  not  take  part  of  the 
fund,  to  the  prejudice  of  those  who  are  not  only  creditors  of  the  part- 
nership, but  of  himself.M 

To  that  rule  there  is  an  exception,  manifestly  founded  in  justice,  and 
that  is,  where  a  partner  becomes  a  creditor,  in  respect  of  the  fraudulent 
conversion  of  his  separate  estate,  to  the  use  of  the  partnership. (r\ 

Another  relaxation  of  the  rule  has  been  admitted,  that  where  there  is 
a  demand,  arising  from  a  dealing  by  the  partnership  in  a  distinct  trade, 


(o)  Smith  v.  Cannan,  22  L.  J.,  Q.  B.  290  ;  S.  C,  2  E.  &  B.  35;  see  12  &  13  Vict. 

S.  67. 
(/>)  See  22  L.  J.,  Q.  B.  291. 

Bxch.  221  ;   S.  C,  22  L.  J.,  Exch.  27;  Leake  v.  Young,  25  L.J.,  Q.  B.  266; 
Ex  parte  Taylor.  6  De  G.,  M.  fc  <;.  392  ;  see  17  Jur.  47G. 
(r)   Bs  parte  Billitoe,  1  Gly.  k  J.  382,  cor.  Ld.  Eldon,  C. 


COPARTNERSHIPS,    ETC.  3G(J 

proof  might  be  admitted. (s)  But,  iu  the  above  case,  there  having  beeu 
no  dealing  by  the  ironmongers  with  the  bankers,  in  the  way  of  the  trade 
of  the  former,  no  iron  goods  furnished,  but  the  only  dealing  being,  in 
fact,  advances  of  money  by  them  to  retire  the  bills  of  the  bank  with, 
Lord  Eldon  held,  that  the  proof,  in  respect  of  the  above  debt,  was 
inadmissible,  (s) 

*But  when  the  advances  are  made  by  the  banking  firm,  in  the  p^oq-i 
way  of  its  trade  of  banking,  and  in  the  course  of  legitimate  deal-  L  "  J 
ings,  then  the  debt  may  be  proved. 

Thus,  A.,  B.,  C,  J).,  and  E.,  constitute  a  firm  of  bankers,  at  York ; 
A.,  B.,  C,  and  D.,  constitute  another  firm  of  bankers,  at  Wakefield ; 
and  the  latter  firm  becomes  indebted  to  the  former,  in  the  way  of  trade 
dealings,  in  a  sum  of  money;  on  the  bankruptcy  of  the  former,  that  sum 
may  be  proved  as  a  debt  on  behalf  of  the  creditors  of  the  York  Bank,  as 
against  the  estate  and  effects  of  the  Wakefield  Bank,  the  two  firms  and 
trades  being  distinct. (<) 

It  would  have  been  the  same,  if  a  banking  firm,  consisting  of  several, 
had  claimed  to  prove  against  any  other  trading  firm,  constituted  by  two, 
or  more,  of  their  own  partners  in  respect  of  advances  made  by  them,  the 
bankers,  in  the  way  of  their  trade,  to  the  lesser  firai.(w) 

But,  it  seems,  this  would  not  be  so,  if  the  other  firm  consisted  only  of 
one  person,  a  partner  in  the  banking  firm,  because  the  creditors  of  the 
joint  firm  are  his  creditors,  and  he  would,  if  his  debt  were  allowed  to  be 
proved  against  the  banking  firm,  be  taking  from  his  own  creditors  what 
ought  first  to  be  applied  in  payment  of  their  debts ;  but,  where  two,  or 
more  partners  carry  on  the  other  business,  the  creditors  of  the  larger  firm 
are  not  the  creditors  of  the  smaller  firm,  and  the  reason  does  not  apply.(x) 

Bankruptcy  and  Winding  up. — With  respect  of  bankruptcy,  &c,  of 
the  company,  it  is  expressly  declared  and  enacted,  (y)  that  every  com- 
pany, of  more  than  six  persons,  *carrying  on  the  trade,  or  busi-  r*524"l 
ness,  of  bankers,  in  England,  shall  be  deemed  a  trading  com-  L  *"  J 
pany,  within  7  &  8  Vict.  c.  Ill,  intituled,  "  An  Act  for  facilitating  the 
Winding  up  of  the  Affairs  of  Joint  Stock  Companies,  unable  to  meet 
their  Pecuniary  Engagements ;"  and  the  new  Joint  Stock  Companies 
Regulation  Act,  which  contains  new  provisions  for  winding  up,  does  not 
apply  to  banks ;  19  &  20  Vict.  c.  47,  s.  2. 

The  statute,  first  referred  to,  provides,  among  other  things,  that  com- 
panies may  be  made  bankrupt,  the  bankruptcy  of  the  company  not  being 
construed  to  be  the  bankruptcy  of  any  member,  in  his  individual 
capacity;  it  declares  what  acts  of  the  company  shall  be  acts  of  bank- 
ruptcy ;  enables  the  assignees  of  the  estate  of  a  company  to  maintain 

(s)  Id.  383,  384.  Except  in  the  case  of  bankers,  one  firm  is  not  allowed  to  prove 
against  another  firm,  carrying  on  a  distinct  trade,  but  consisting  in  whole  or  in  pa  it 
of  the  same  persons,  where  the  debt  arises  only  from  money  advanced  by  one  to  the 
other.     Colly.  Partnersh.  676,  2nd  edit. 

(t)  Ex  parte  Castell,  2  Gly.  &  J.  124. 

(»)  Ex  parte  Brenchley,  2  Gly.  &  J.  127;  S.  C,  5  L.  J.,  Chanc.  73;  Ex  parte 
Stroud,  id. 

(x)  See  per  Leach,  V.  C,  2  Gly.  &  J.  126,  127. 

(y)  7  &  8  Vict.  c.  113,  s.  48  ;  see  infra,  cap.  xvi. 


370         GRANT  OX  THE  LAW  OF  BANKING. 

actions  to  recover  debts,  or  demands,  on  behalf  of  the  company,  and 
enables  any  persons,  including  members,  to  prove  or  claim  under  the  fiat 
against  the  company;  provides,  that  a  member's  shares  shall  not  b< 
off  against  demands  by  the  ast  with  other  provisions,  assimilating 

the  condition  of  a  bankrupt  company  to  that  of  an  individual. 

Therefore,  a  fiat  in  bankruptcy  may  be  had  recourse  to  against  all 
banking  copartnerships,  established  under  7  Geo.  IV.  c.  46,  for  none 
can  be  established  under  that  act  that  do  not  exceed  six  persons  in  the 
number  of  the  partners. 

With  respect  to  winding  up  the  affairs  of  a  banking  copartnership,  of 
this  nature,  under  the  "Winding-up  Acts,(z)  the  case  is  the  same,  in 
effect ;  for  these  apply  to  partnerships,  associations,  and  companies, 
whereof  the  partners,  or  associates,  are  not  less  than  seven. (a) 

Therefore,  all  banking  copartnerships,  established  under  7  Geo.  IV. 
c.  46,  are,  also,  liable  to  be  wound  up  under  those  statutes. 
p.. ..,--.       But  these  copartnerships,  under  7  Geo.  IV.  c.  46,  are  *ex- 
L     ~  J  pressly  exempted  from  the  operation  of  the  act  of  1844,  for  the 
Registration,  Ac.,  of  Joint  Stock  Companies. Oj) 

Notice. — The  operation  of  the  acts  of  parliament,  relating  to  copart- 
nerships, established  under  7  Geo.  IV.  c.  46,  is  such  as  to  render  them 
quasi  corporations  to  this  extent,  that  notice  to  one  of  the  members,  or 
even  to  one  of  the  directors,  provided  he  has,  by  the  constitution  of  the 
company,  no  share,  or  control,  in  the  management  of  the  accounts  of  the 
company,  is  not  notice  to  the  company.  M 

Directors. — In  inquiring  as  to  the  authority,  powers,  and  liabilities  of 
directors  of  a  banking  copartnership,  in  the  first  place,  it  will  be  proper 
to  premise,  that,  in  construing  a  deed  of  settlement  of  one  of  these  co- 
partnerships, the  court  will,  while  collecting  the  extent  of  the  authority 
intended  to  be  conferred,  on  the  directors,  construe  it  with  reference  to 
the  nature  of  the  business,  which  was  to  be  transacted,  and  the  purposes 
which  it  contemplated,  in  order  to  judge  what  powers  and  authorities  the 
law  would  imply  from  the  nature  of  the  office,  and  how  far  those  powers 
and  authorities  are  enlarged,  or  restricted,  by  any  of  the  provisions  of 
the  instrument. (d\ 

In  a  case,  wherein  the  deed  of  settlement  expressly  invested  the  di- 
rectors with  full  power  and  authority  to  superintend,  order,  conduct, 
regulate,  and  manage  all  and  singular  the  affairs  and  business  of  the  Baid 
company,  to  the  best  of  their  discretion  and  judgment,  and  provided  that 
the  board  of  directors  should,  and  lawfully  might,  from  time  to  time, 
piceno-i  devise  and  make  such  provisions,  rules,  orders,  and  *regulatdone, 
L  J  touching  the  government,  carrying  on,  and  management  of  the 
affairs  of  the  said  company,  the  same  not  being  repugnant  to  the  general 
rules  and  regulations,  in  the  deed  contained,  as  they  Bhould  think  ezpe- 

(z)  11  &  12  Vict.  c.  45,  amended  by  12  k  13  Vict.  c.  108. 
(«)  12  &  i::  Vict.  c.  L08,  B.  1. 

x  8  Vict.  c.  L10 
(r)  l'owles  v.  Page,  3  0.  B.  26  :  a  •■  Willis  v.  Bank  of  England,  4  A.  &  E.  21. 
(•/i  Bank  of  Australasia  v.  Breillat,  6  M'»>.  P.  C.  190.     Further,  as  to  powers  of 
directors  and  construction  of  deed  of  settlement,  ■•  <    Forbes  v.  Marshall,  ll  Excb. 
Pass  book  when  not  evidence  ofperson  being  director,  16  0.  B.  671. 


COPARTNERSHIPS,    ETC.  371 

client ;  and  the  deed  also  provided,  that  the  concern  should  continue  for 
100  years :  it  was  held,  that  the  directors  Lad  the  powers  of  managing 
partners,  in  an  ordinary  banking  partnership,  amongst  which,  is  the 
power  of  borrowing  money,  for  the  purpose  of  discharging  the  existing 
liabilities  of  the  bank,  till  the  assets  can  be  realized ;  and  of  discontinu- 
ing the  bank,  if  they  think  such  a  step  essential  to  the  interests  of  the 
shareholders ;  and  that  their  having  raised  a  loan,  which  they  had  under- 
taken to  repay,  and  accompanied  the  engagement  with  other  stipulations, 
some  of  which  were  ultra  vires,  did  not  discharge  the  bank;  the  only 
effect  being,  that  such  stipulations  could  not  be  enforced. (e) 

But  it  seems  hardly  necessary  to  point  out,  that  directors  of  a  banking 
copartnership,  whether  with  or  without  the  consent  of  the  majority  of 
the  shareholders,  have  no  authority  to  convert  their  banking  company 
into  a  company  for  different  purposes ;  and  that  money  borrowed  for  the 
purpose  of  effecting  that  transmutation,  with  notice  on  the  part  of  the 
lender,  will  not  form  a  debt  of  the  company,  for  the  recovery  of  which  it 
can  be  sued.(/) 

Nevertheless,  directors  may,  undoubtedly,  at  their  discretion,  either 
discontinue  altogether  the  business  of  the  concern,  or  restrict  the  busi- 
ness to  certain  portions  of  that  which  it  was  originally  intended  the  bank 
should  employ  its  funds,  &c,  in,  if  the  directors  think  such  steps  essential 
to  the  interests  of  the  shareholders.  Such  a  power  seems  necessarily 
implied  in  the  exclusive  power  of  management ;  in  the  power  of  deter- 
mining what  transactions  should  be  entered  into,  *what  notes  r*527"| 
issued,  what  deposits  received,  what  bills  discounted,  or  loans  L  w  J 
made. 

The  other  hypothesis  involves  this  difficulty,  that,  if  the  business  can 
only  be  discontinued  by  a  vote  of  the  majority  of  the  shareholders,  then, 
unless  a  majority  can  be  brought  together,  in  person,  or  by  their  attor- 
neys, the  business,  in  the  above  instance,  must  have  continued  for  100 
years, — it  being  a  stipulation  of  the  deed  of  settlement,  and,  indeed,  the 
principal  object  of  it,  that  such  should  be  the  duration  of  the  banking 
establishment, — and  never,  during  that  period,  could  have  been  con- 
cluded, except  by  bankruptcy  or  insolvency. 

But  it,  by  no  means,  is  incumbent  on  creditors,  in  such  a  case,  to  have 
recourse  to  a  fiat  in  bankruptcy ;  they  have  a  right  to  recover  their  debts 
from  each  individual  shareholder,  so  that,  in  the  above  case,  the  bank 
must  go  on  until  each  individual  shareholder  was  ruined. 
This,  therefore,  is  an  inadmissible  supposition.  (</) 
But,  though  the  directors  may  restrict,  it  does  not  seem  that,  even 
with  the  sanction  of  a  majority  of  the  members,  they  have  the  same 
power  to  extend,  the  business;  ex.  gra.,  if  the  copartnership  were  con- 
stituted to  do  banking  in  England,  they  could  not  extend  the  business 
to  India  or  the  colonies'.  (7t) 

(e)  Bank  of  Australasia  v.  Breillat,  6  Moo.  P.  C.  152,  193. 

(f)  6  Moo  P.  C.  197.  There  are  strong  authorities  that  "to  a  bill  praying  a 
dissolution  of  a  partnership,  all  the  partners  must  be  parties."  Per  Ld.  Cotten- 
Siam,  C,  Walworth  v.  Holt,  4  My.  &  C.  635. 

(J)  6  Moo.  P.  C.  198.  (h)  See  10  Hare,  54,  55,  61  j  1  Colly.  3(9. 


GRANT  ON  THE  LAW  OF  BANKING. 

Tin-  Following  ease,  in  some  degree,  illustrates  the  question  of  what  is 
business  within  the  scope  of  these  copartnerships. 

The  deed  of  settlement  of  a  banking  copartnership  provided  that  the 
directors  should  not  be  fewer  than  five,  nor  more  than  seven;  that  three, 
>>r  more,  should  constitute  a  board,  and  be  competent  to  transact  all  ordi- 
nary business}  that  the  directors  should  have  power  to  compound  for 
any  debt  owing  to  the  company,  and  accede  to  and  execute  any  deed  of 
,«-.  composition,  or  conveyance,  or  assignment  of  his  *estate  or 
L  J  effects,  made  by  any  debtor  of  the  company,  whether  a  share- 
holder or  not,  for  the  benefit  of  his  creditors,  and  to  give  time  to  any 
debtor  for  the  payment  of  his  debt,  either  upon  security,  or  without; 
and  to  abandon  any  debt  which  might  seem  bad  or  desperate. 

A.  had  bought,  of  the  bank,  a  colliery,  of  which  they  were  mortgagees, 
for  a  sum,  part  of  which  he  had  paid  in  cash,  and  for  the  balance  had 
accepted  bills  which  had  been  renewed,  and  of  which  some  were  in  cir- 
culation, and  others  overdue,  in  the  hands  of  persons  with  whom  they 
had  been  negotiated  by  the  company.  He  was  also  largely  indebted  to 
the  company  on  the  balance  of  his  account  current.  Afterwards  the 
number  of  directors  having  become  reduced  to  four,  these  four  executed 
a  deed,  compounding  the  debt  on  the  account  current,  and  for  the  re- 
mainder of  the  purchase-money,  on  payment  of  1,000/.  by  A.,  and  his 
agreeing  to  abandon  the  colliery  to  the  bank;  the  directors  also  cove- 
nanted "on  behalf  of  the  company,  so  far  as  they  could  lawfully  bind  the 
said  company,  but  not  further,  or  otherwise,"  to  indemnify  A.  against 
all  snob  bills  of  exchange  as  had  passed  through  the  company's  hands. 

A.  brought  an  action  of  covenant  for  not  indemnifying  him,  when  it 
was  held  that  the  covenant  did  not  bind  the  copartnership ;  for  that  this 
was  not  ordinary  business ,'  and  no  smaller  number  than  five  directors 
were  competent  to  transact  it;  and  it  was  made  a  question  whether  a 
board  of  three  directors  could  transact  even  ordinary  business,  unless  it 
board  of  three  out  of  five  directors. (/) 

Appropriation  of  Shares. — Directors  ought  to  be  aware  of  the  follow- 
ing principle. 

A  transaction  entered  into  by  them,  as,  for  instance,  the  appropriation 
to  themselves  of  shares,  may  be  incapable  of  being  sustained,  with  regard 
to  the  provisions  of  the  deed  of  settlement,  or  the  principles  of  equity 
r*o991  Kov,ni'n-  tne  Administration  of  trusts,  as  a  transaction  binding 
L  J  on  the  company,  unless  brought  before  the  shareholders,  and  con- 
tinued by  them;  yet,  nevertheless,  the  directors,  by  that  transaction, 
although  not  confirmed,  Ac.,  may  be  bound,  as  between  themselves  and 
the  company,  notwithstanding  the  irregular  nature  of  it. 

Thus,  A.,  a  director  in  a  banking  copartnership,  had  regularly,  before 
1 3 1".  become  owner  of  twenty  share-,  which  number  of  shares  each  di- 
rector  was,  by  the  deed  of  settlement,  obliged  to  hold,  as  a  qualification 
for  the  office.  The  deed  of  settlement  provided,  that  the  shares  of  the 
company  should  he  vested  in  the  court  of  directors,  who  should  have  full 
power  to  allot,  appropriate,  reserve  for,  or  dispose  of  the  same,  to  such 

(i)  Kirk  v.  Bell,  1G  Q.  B.  290. 


COPARTNERSHIPS,    ETC.  373 

parties,  and  upon  such  terms,  and  in  such  manner,  as  they  might  think 
fit :  it  was  also  provided,  that  the  executor  of  any  proprietor  should  not, 
as  such,  be  a  proprietor  in  respect  of  such  shares,  but  he  should  be  at 
liberty  to  dispose  of  them ;  or  the  company  might,  upon  an  executor  giv- 
ing notice,  and  complying  with  the  provisions  of  the  deed,  permit  him 
to  become  the  proprietor,  and  personally  chargeable. 

The  directors,  7th  August,  1840,  resolved,  without  the  privity  of  the 
shareholders,  to  appropriate  to  themselves  a  certain  amount  of  additional 
shares — or,  as  they  called  them,  "  credit  shares" — which  they  were 
severally  to  pay  for,  by  giving,  respectively,  their  promissory  notes, 
payable  to  the  trustees  of  the  bank,  for  the  amount  for  which  each  sub- 
scribed. 

A.  agreed  to  take  (and  he  gave  a  promissory  note  in  payment  for)  one 
hundred  of  these  shares ;  he  also  signed  a  letter,  binding  himself  to  pay 
the  deposit  and  calls  on  them,  but  did  not  execute  the  deed  of  settlement 
in  respect  of  them.  He  died  in  1848,  eight  years  after  the  making  of 
the  promissory  note,  never  having  paid  any  interest  on,  or  any  part  of 
the  principal  of,  the  promissory  note ;  in  the  books  of  the  company,  how- 
ever, credit  was  given  to  him  in  *respect  of  dividends  on  the  i-*--™-! 
"credit  shares,"  and  he  was  charged  with  interest  on  the  promis-  L  '  J 
sory  note. 

His  executor  was  held  to  be  rightly  placed  on  the  list  of  contributo- 
ries,  not  only  in  respect  of  the  twenty  shares,  but  also  in  respect  of  the 
one  hundred  "credit  shares,"  although  the  creation  of  the  "credit 
shares"  was  not  warranted  by  the  deed,  nor  were  they,  in  fact,  ever 
issued  or  allotted. 

The  directors,  it  was  said,  "  clearly  were  not  entitled  to  allot  to  them- 
selves a  very  large  proportion  of  the  capital  of  the  company  without 
bringing  in  a  single  shilling  in  aid  of  that  capital,  only  giving  promissory 
notes,  payable  at  some  distant  period,  debiting  themselves  with  interest, 
as  it  became  payable  on  their  several  notes,  and  taking  credit  for  the  di- 
vidends, to  which  they  would  properly  have  been  entitled,  if  they  had 
actually  made  the  payments. "(&) 

The  whole  transaction,  it  is  to  be  observed,  remained  on  paper  only, 
while  it  was  represented  as  a  real  transaction ;  for  the  directors  publicly 
stated  their  liability  to  pay  up  a  capital,  equal  to  10^.  a  share,  upon  as 
many  "credit  shares"  as  they  had  respectively  appropriated  to  them- 
selves. Such  a  transaction  could  obviously  never  be  maintained  in  a 
court  of  justice,  for  the  effect  of  it  would  be,  that  the  directors  would  be 
at  liberty,  if  the  speculation  flourished,  to  insist  upon  it  as  a  real  trans- 
action ;  if  it  failed,  to  throw  up  the  shares,  on  the  plea  that  they  had 
entered  into  dealings  which  were  not  authorized  or  sanctioned  by  their 
deed  of  settlement. 

Hence  they  were  held  to  be  themselves  bound  by  the  transaction, 
although  they  were  not  entitled  to  enforce  it  against  the  general  body  of 
the  shareholders,  and,  consequently,  the  executor  was  liable  as  a  contri- 
butory. 

(k)  In  re  Royal  Bank  of  Australia,  (Robinson's  Executors'  case,)  2  De  G.,  M.  & 
G.  517,  520. 


.•,71  (J  RANT    ON    THE    LAW    OF    BANK  INC. 

In  a  case  which  arose  under  the  Bame  deed  of  settlement,  a  director 
gularly  owner  of  twenty  shares;  he,  subsequently,  in  pursuance  of 

.  ,  the  resolution  of  the  court  of  *direotors,  mentioned  in  the  last 
L  J  ease,   took   five  hundred   of  the   "credit   shares,"   and   gave   his 

issory  note,  payable  in  five  years,  for  the  amount;  he  also  signed  i 
letter  binding  himself  to  pay  the  deposit  and  the  calls,  but  did  not  exe- 
i  ate  the  deed  of  settlement  in  n  spec!  of  the  five  hundred  shares.  Three, 
months  after  this  he  died.  Within  one  month  from  the  death,  his  exe- 
cutors applied  to  the  directors  to  ascertain  the  extent  of  his  interest  in, 
or  liability  to,  the  company.  In  answer,  they  were  informed,  on  behalf 
of  the  directors,  that  their  testator  held  twenty  shares.  These  were, 
thereupon,  duly  transferred  to  a  purchaser,  and  the  directors  afterwards 
cancelled  the  five  hundred  shares,  and  the  promissory  note  for  the 
amount. 

Bight  years  after  the  death  of  the  testator,  it  was  held  that  the  execu- 
tors ought  not  to  be  placed  upon  the  list  of  oontributories,  under  the 
Winding-up  Act,  1848,  for,  although  his  estate  might  have  been  bound, 
if  the  claim  had  been  promptly  asserted,  at  the  instance  of  the  share- 
holders, yet,  that  so  long  after  the  distribution  of  his  assets,  the  loss 
arising  from  the  misrepresentation  of  the  directors  must  fall  upon  them- 
selves and  the  company,  and  not  upon  the  estate. (/) 

Notwithstanding  what  has  been  said  with  respect  to  the   conduct  of 
the  directors  of  the  same  company  in  the  former  case,  it  will  not  be  su- 
perfluous to  add  some  observations,  with  a  view  to  place  the  law  of  these 
mi  a  clearer  light. 

The  deed  of  settlement  provided  and  required  that  the  capital  of  the 
company  should  be  one  million  sterling,  divided  into  20,000  shai 
">!>/.  each,  and  that  the  proprietor  of  each  share  should  bring  in  and  pay 
to  the  company  the  full  sum  of  50/.  in  respect  of  such  share,  as  aud 
when  called  upon  so  to  do,  in  manner  thereinafter  (i.  e.  in  the  deed  of 
settlement)  provided.  The  court,  therefore,  gathered  the  intention  of 
p*-o9-i  the  parties  to  the  deed  to  be  "that*all  the  shares  should  be 
L  ■*  actually  bona  fide  subscribed  for  as  upon  money  payments,  no 
doubt  depending  upon  the  periods  when  the  directors  should  think  it 
right  to  make  the  call."(»i) 

Another  clause,  (already  set  out  in  the  last  case,(»))  the  court  thought 
might  l><-  considered,  perhaps,  as  giving  power  to  the  directors  "to  ap- 
propriate or  reserve,"  not  in  terms,  hut  in  substance,  for  tin  out  ht  g  and 
their  friend*,  the  whole  of  the  shares;  the  words  are,  "to  such  parties, 
and  upon  such  terms  as  they  shall  think  (it,"  which  rather  looks  as  if 
tiny  were  to  deal  with  third  parties;  but,  whoever  might  take  them,  the 
shares  could  only  be  taken,  subject  to  a  general  liability  to  pay  for  them, 
as  a  money  transaction,  although  the  payment  was  to  be  deferred,  in  the 
shape  of  calls,  till  wanted,  (m  | 

The  whole  amount  of  the  "credit  shares"  taken  by  the  directors  formed 
an  enormous  sum,  in  the  aggregate,  and  a  very  large  proportion  of  the 

case,  2  De  G.,  M.  k  G.  522,  cor.  Ld.  St.  Leonards,  C. 
(m)  2  De  Q.,  M.  k  ('..  („)  See  supra,  p.  529. 


COPARTNERSHIPS,    ETC.  375 

entire  capital  mentioned  in  the  deed  of  settlement.  The  way  in  which 
this  measure  was  carried  into  execution  was  not  by  alloting  any  of  these 
"credit  shares,"  for  there  was  no  trace  of  any  allotment  in  the  books  of 
the  company,  much  less  was  there  any  evidence  of  the  transfer  of  any 
such  shares.  It  was  not,  in  point  of  fact,  a  real  transaction,  as  regarded 
as  a  purchase  of  shares.  What  the  directors  meant  to  do  was  to  enter 
into  an  engagement  between  themselves,  that  as  money  would  be  required 
to  sustain  the  concern,  they  would,  in  the  proportions  in  which  they  had 
subscribed,  make  the  advances'  upon  what  were  called  "  credit  shares," 
but  which  were,  in  fact,  credit  sales.  These  shares  were  entered  in  the 
books  as  10/.  shares ;  there  was,  however,  no  creation  of  any  such  shares ; 
but  supposing  them  to  have  been  actually  existing,  there  was  no  evidence 
before  the  court  to  show  *that  anyone  of  these  directors  was  en-  r^coo-i 
titled  to  any  specific  credit  shares,  because  none  were  ever  issued,  L  J 
and  marked  as  required  by  the  deed.  Then,  were  these  "  credit  shares" 
ever  treated  by  the  directors  themselves  as  real  shares  ?  Up  to  the  death 
of  the  testator  in  this  case,  dividends  were  paid  on  the  shares  which  had 
been  regularly1  allotted,  but  no  dividend  was  ever  paid  upon  these 
"  credit  shares  •"  none  was  claimed ;  no  calls  were  made  ;  no  payment  of 
interest  was  ever  made  on  the  sums  for  which  the  directors  had  given 
their  promissory  notes.  The  testator  was,  at .  the  time  of  his  death,  a 
real  holder,  as  director,  of  twenty  shares,  and  those  were  regularly  entered 
in  a  separate  account  to  his  credit.  The  payments  on  those  shares  were 
regularly  given  credit  for ;  he  had  received  dividends  upon  them ;  and 
when  the  executors  sold  them  there  was  a  regular  transfer  of  them,  in 
precisely  the  same  way  as  any  other  shares  would  have  been  dealt  with, 
and  transferred,  by  any  individual  shareholder.  That  showed  a  dealing 
regularly  with  the  shares  which  were  created,  but  with  respect  to  the 
cancellation  of  the  "credit  shares,"  which  were  neither  created  nor 
allotted,  that  was  not  a  regular  transaction,  and  it  never  was  communi- 
cated to  the  shareholders  generally. 

There  was  this  difference  between  this  case  and  the  one  above  dis- 
cussed, that  in  consequence  of  the  testator's  death,  in  January,  1842,  he 
did  not  appear  to  have  been  credited  in  the  books  of  the  company  with 
any  dividends  in  respect  of  the  "credit  shares  ;"  and  it  was  remarked, 
as  an  extraordinary  circumstance,  by  Lord  St.  Leonards,  that,  although 
the  testator,  Mr.  Meux,  was  a  man  of  business,  and  had  taken,  and  made 
himself  responsible  for,  five  hundred  "  credit  shares,"  yet  there  did  not 
appear  to  have  been  any  entry,  or  trace  of  any  item  respecting  these 
shares,  in  any  of  his  private  books,  which  would  have  led  any  one,  more 
especially  those  with  whom  he  was  connected,  to  suppose  that  he  had 
entered  into  any  such  transaction. 

The  executors,  from  the  replies  that  were  made  to  their  *in-  pcg^-i 
quiries  by  the  secretary,  on  behalf  of  the  directors,  when,  in  con-  *-  J 
sequence,  they  had  sold  and  transferred  the  twenty  shares,  believed,  and 
had  a  right  to  believe,  that  they  had  no  longer  any  liability  or  interest 
in  the  concern. (p)     Seven  years  after  all  this  had  taken  place,  the 

(P)  Per  Ld.  St.  Leonards,  C,  2  De  G.,  M.  &  G.  533. 


376  Q  R  A  NT    ON    THE    LAW    OF     BAN  KING. 

attempt  was  made  to  place  them  <>n  the  li-t  of  oontributories,  on  the  as- 
sumption that  the  testator's  estate  remained  liable  for  the  amount  of  the 
five  hundred  "credit  -liar.  -." 

Now,  with  respect  to  the  answer  of  the  directors,  before  mentioned, 
that  the  testator  was  holder  of  twenty  shares,  it  was  contended  that  the 
directors  were  not  agents  of  the  company,  or,  as  such,  clothed  with  au- 
thority, to  make  any  misrepresentation)  and  that,  therefore,  any  state- 
ment by  them,  which  was  contrary  either  to  fact  or  law,  would  not  be  a 
statement  obligatory  on  the  general  body  or  the  shareholders. 

That,  however,  the  court  held,  not  to  be  the  nature  of  this  case.  Here 
all  the  directors  had,  without  the  knowledge  of  their  shareholders, 
entered  into  an  irregular  transaction.  As  far  as  appeared  there  had,  at 
no  time  before  the  first  application  of  the  executors,  been  any  representa- 
tion made,  by  the  directors,  to  the  shareholders  at  large,  that  there  had 
been  any  paid-up  capital  realized,  or  realizable,  from  the  shares  so  im- 
properly taken  by  the  directors. 

It  remained,  at  that  time,  a  transaction  simply  resting  upon  the  pro- 
missory notes,  and  upon  the  agreement  between  the  directors ;  it  never 
was  a  concluded  transaction  ;  no  shares  were  ever  issued  and  marked  ;  so 
that  there  never  were  any  of  these  shares  which  could  be  considered  as 
the  particular  shares  that  belonged  to  a  particular  director.  Then  the 
directors,  who  entered  into  this  incomplete  transaction,  cancel  it,  so  far 
as  relates  to  the  estate  or  interest  of  .Mr.  Meux.  Never  having  been 
communicated  to  the  shareholders,  it  was  an  improper  transaction,  but 
up  to  the  time  of  the  cancellation  no  benefit  had  been  derived  from  it, 
and  no  damage  had  been  sustained  by  reason  of  it. 

pt.rq.--i  *Under  these  circumstances  the  court  could  not  conclude  that 
L  -I  the  directors  had  not  the  power  to  rescind  what  had  never  been 
a  concluded  transaction,  nor  been  represented,  to  the  shareholders  at 
large,  as  a  transaction  binding  upon  Mr.  Meux.(y) 

Had  this  claim  been  made,  on  behalf  of  the  shareholders,  upon  his 
estate,  immediately  after  the  occurrence  of  the  transaction,  the  court 
might  have  held  that  the  executors  could  not  be  released;  but,  being 
made  upwards  of  seven  years  after  they  had  been  released,  and  the  assets 
distributed,  it  was  impossible  to  enter  into  an  inquiry  of  what  had  become 
of  those  assets,  and  to  trace  them  through  the  different  persons  who  might 
have  enjoyed  the  benefit  of  the  release  of  the  executors. 

Such  an  inquiry  might,  the  court  observed,  bring  ruin  on  many  per- 
sons; to  say  nothing  of  the  endless  Litigation  which  would  inevitably 
arise,  in  order  to  give  to  the  general  body  of  the  shareholders  of  this 
company,  a  benefit  to  which,  in  the  opinion  of  the  court,  they  Mere  not 
entitled. 

uThis  is  a  case,  (Lord  St.  Leonards  went  on  to  say,)  do  doubt,  which 
tries  the  doctrine  of  law  and  equity  very  Btrongly,  because  Mr.  Mens 
himself  was  an  original  wrong-doer,  and  this  release  of  the  executors, 
(which  the  representations  of  the  directors  to  them  operated  to  effect,)  is 
to  be  obtained  for  the  benefit  of  his  assets.     But  it  cannot  be  endured, 

(q)  2  Dc  G.,  M.  &  G.  533,  534. 


COPARTNERSHIPS,    ETC.  877 

that  any  body  of  shareholders  shall  be  at  liberty  to  say,  that  their  direc- 
tors are  to  make  a  representation,  upon  the  faith  of  which  parties  are  to 
act,  and  distribute  assets,  and  that  the  general  body  are  not  to  be  bound 
by  those  representations.  It  would  require,  (it  was  said,)  a  very  strong 
case,  to  induce  the  court  to  release  the  general  body  from  the  effect  of 
representations  of  directors,  though  improperly  made,  but  which  led  to 
the  distribution  of  assets.  In  answer  to  those  seeking  to  recal  the  assets 
so  distributed,  the  court  would  be  more  disposed  to  hold,  that  the  direc- 
tors, *who  had  made  the  misrepresentations,  should  be  personally  r^g-j 
liable  to  the  general  body,  for  any  losses  sustained  by  reason  of  L 
such  misrepresentation,  than  to  visit,  upon  legatees,  the  consequences  of 
those  misrepresentations."^) 

The  above  cases  have  been  dwelt  upon  in  great  detail ;  but  not,  it  is 
conceived,  at  a  length  which  will  be  found  useless,  for  the  judgments 
seem  to  contain  much  to  elucidate  a  variety  of  subjects  of  great  impor- 
tance, both  to  directors  and  shareholders,  in  banking  companies ;-— the 
effect  of  powers  given  to  directors  in  deeds  of  settlement ;  the  liabilities 
incurred  by  shareholders ;  the  extent  of  the  powers  and  the  liabilities 
of  directors ;  the  effect  of  representations  made  by  directors  to  executors, 
in  reference  to  the  testator's  interest  in  their  company,  &c— -are  treated 
in  such  an  explanatory  manner,  and  placed  in  such  clear  lights,  as  to 
justify,  it  is  thought,  the  occupying  more  space  with  the  discussion,  than 
might,  at  first  sight,  seem  to  be  desirable. 

By  shareholders,  or  members  of  these  companies,  it  ought  never  to  be 
forgotten,  that  the  interests  of  the  body  of  directors  frequently  clashes 
with,  and  is  not  seldom  directly  opposed  to,  the  interests  of  the  general 
body. 

When,  therefore,  the  shareholders  execute  deeds  of  settlement,  con- 
taining clauses  similar  to  that  above  cited,(s)  giving  "full  power  to  the 
court  "of  directors  to  allot,  appropriate,  reserve  for,  or  dispose  of,  the 
shares,  to  such  parties,  and  upon  such  terms,  and  in  such  manner  as  they 
may  think  fit ;"  the  measure  is  one  which  the  shareholders  ought  to  be 
fully  impressed  with  the  importance  of,  conferring,  as  it  seems  to  do,  so 
vast  a  power  upon  the  body  of  directors.  But  the  power  entrusted  seems 
to  be  much  increased  by  a  subsequent  provision  in  the  same  deed,  "that 
the  management  of  the  company,  and  the  business  and  concerns  thereof, 
and  the  regulation,  investment,  and  application  of  the  properties,  funds, 
securities,  and  money,  for  the  time  being,  belonging  *to  the  com-  ^^537-1 
pany,  and  the  regulation  and  determination  of  the  modes  and  L 
terms  of  carrying  on  and  transacting  the  business  of  the  company,  and 
other  matters  and  things  whatsoever  connected  with,  or  relating  to  the 
business  and  concerns  of  the  company,  shall  be  solely  and  exclusively 
vested  and  reposed  in  the  court  of  directors,  except  as  herein  excepted, 
or  otherwise  provided ;"—  and,  still  further,  by  another  clause,  "that  the 
court  of  directors  may  alter,  vary,  or  transpose  the  properties,  funds,  se- 
curities, or  moneys  of,  or  belonging  to,  the  company,  or  any  of  them,  or 
any  part  thereof,  as  they  should  think  fit,  and  may  make  and  give  such 

(r)  2  De  G.,  M.  &  G.,  535.  (*)  See  supra,  p.  529. 


GRANT  ON  THE  LAW  OF  BANKING. 

orders  in  regard  thereto,  and  also  for  the  Bale  or  other  disposition  of  the 
Baid  properties,  funds,  securities,  or  moneys,  or  any  part  thereof,  ai  to  the 
court  of  directors  shall  seem  meet." 

Now,  more  unqualified  powers  can  hardly,  perhaps,  be  conceived. 
The  directors,  it  will  be  observed,  are  not  hampered  in  their  dealings 
with  the  "property,  funds,  securities,  or  moneys"  of  the  company. 
Even  by  the  restriction,  that  they  shall  be  disposed  of  in  the  way  that 
may  seem  best  for  the  welfare  and  prosperity  of  the  body,  no  reserve  ap- 
•  to  have  been  made  of  questions  upon  which  the  directors  should 
not  be  at  liberty  to  act,  without  consulting  a  general  meeting  of  the 
shareholders;  all  is  left  wholly  unguarded,  unlimited  confidence  appears 
to  have  been  reposed. 

Notwithstanding,  however,  that  the  deed  conferred  such  large  powers, 
tin'  court  treated  the  conduct  of  the  directors  as  a  fraud  upon  the  genera] 
body  of  the  shareholders  ;  for  the  directors  were  aware,  that  without  the 
aid  of  the  fictitious  capital  represented  by  these  "credit  shares,"  there 
was  no  other  way,  in  which  it  was  possible  for  the  concern  to  have  gone 
on. 

If,  for  instance,  at  the  first  meeting  of  the  shareholders,  the  directors 
had  only  represented  the  capital  which  was  actually  paid  up,  this  com- 
pany, it  is  clear,  must  have  stopped  at  once,  and  that,  in  that  case,  the 
P^rqo-i  directors  would  have  lost  *all  their  power  and  fancied  benefit; 
L  -I  but,  by  misrepresenting  the  real,  bona  fide,  state  of  the  concern, 
they  led  on  the  persons  whose  interests  it  was  their  duty  to  have  pro- 
tected, and  a  Court  of  Equity  cannot  allow  any  of  the  parties  to  such 
misrepresentation  to  escape  from  that  common  calamity,  of  which  they 
themselves  have  been  the  authors.^) 

Binding  Shan  holders. — The  directors  of  the  Royal  Bank  of  Australia 
issued  promissory  notes  in  this  form  : — 

"The  Royal  Bank. 

"We,  directors  of  the  Royal  Bank  of  Australia,  for  ourselves,  and  the 
other  shareholders  of  the  said  company,  jointly  and  severall}-  promise  to 
pay  for  value  received  on  account  of  the  company." 

This  was  signed  thus  : — 

"A.  B.,  Chairman, 

"C.  I).  ) 

„vi  7^ '  r Directors. 

«JS.  I.,  j 

"Of  Australia." 

This  attempt  to  bind  the  shareholders  severally  was  held  to  be  ultra 

vires  of  tin'  directors,  and,  consequently,  in  that  respect  void;  neverthe- 

assuming  tint  the  parties  signing  tin'  note  were  authorized  to  sign 

promissory  notes  on  behalf  of  tin'  company,  this  note  bound  the  company, 

as  it  sufficiently  showed  an  intention  to  do  so.(u) 

Jt  is  to  he  observed,  that  nothing  here  laid  down  conflicts  with  the 

(t)  Meux's  case,  2  De  G.,  if.  k  Q.  521. 

(u)  liaclae  v.  Sutherland,  3  K.  A:  B.  1.  wliere  see  deed  of  settlement  of  Bank  of 
'  out,  id.  4  ;  Bee  14  M.  k  W.  469. 


[*539] 


COPARTNERSHIPS,    ETC.  879 

proposition  already  stated  on  the  highest  authority,  (?;)  that  in  banking 
copartnerships,  directors,  as  such,  have  power  to  borrow  money,  for  the 
ordinary  purposes  of  the  banking  business,  so  as  to  bind  the  partnership, 
unless  the  power  is  expressly  excluded  by  the  terms  of  the  deed  :  all  that 
was  determined  in  this  respect,  was  this — directors  *of  a  banking 
copartnership  have  no  implied  authority  to  borrow  in  that  man- 
ner, so  as  to  bind  the  partnership. 

The  Royal  Bank  of  Australia  stopped  payment  in  1848 ;  in  an  action, 
(which  came  on  to  be  tried  in  1852,)  by  the  holder,  on  certain  notes  of 
the  above  form,(.y)  which  were  at  five  years'  date,  and  attached  to  each, 
and  on  the  same  paper,  were  coupons,  for  half-yearly  interest,  at  the  rate 
of  bl.  per  cent.,  till  the  principal  would  become  due,  and  which  had  been 
issued,  through  a  broker,  employed  by  the  directors,  and  for  which  the 
plaintiff  had  paid  the  full  value,  and  sought  to  recover  from  certain  of 
the  directors,  the  amount,  &c. ; — it  was  held,  (on  a  special  case,  stating 
the  above  facts,  and  also  that  in  the  advice  notes,  from  the  broker  to  the 
plaintiff,  the  transaction  was  called  a  "Sale  of  Debentures;"  that  the 
documents  appeared  sometimes  to  have  been   called  by  the  company's 
agent,  «  Deposit  notes ;"  and  that  the  money  raised  by  means  of  these 
notes  was  employed  as  capital  in  starting  branches  of  the  bank  in  the 
colonies,) — that  the  real  nature  of  the  transaction  was,  in  substance,  a 
loan  to  the  bank,  on  the  security  of  the  notes ;  and  assuming  that  the  di- 
rectors had  authority  to  contract  such  loan  on  behalf  of  the  company,  it 
might  be  recovered  by  the  plaintiff,  against  the  shareholders,  as  money 
lent ;  but  that  the  transaction  was  so  much  out  of  the  ordinary  course  of 
banking  business,  that  authority  to  bind  the  partnership  could   not  be 
ascribed  to  the  directors  as  such ;   an  express  authority  would  be  neces- 
sary ;  their  implied  authority,  to  do  all  that  is  in  the  ordinary  course  of 
banking  business,  would  not  suffice  to  establish  their  power,  to  bind  the 
partnership,  in  this  mode ;  the  deed  of  settlement,  however,  was  consid- 
ered to  have  given  authority  to  set  up  branch  banks  in  the  colonies,  and 
to  borrow  money  for  that  purpose,  in  the  mode  adopted ;   and  the  share- 
holders, it  was  also  held,  must  be  taken  to  have  ratified  what  had  been 
done,  it  appearing  to  the  court,  as  a  fact,  that  at  successive  annual  meet- 
ings of  the  ^shareholders,  it  was  known  that  the  capital,  for  this  pp^n-i 
purpose,  had  been  borrowed. (,~)  *-         -J 

The  same  deed  of  settlement,  (dated  August,  1840,)  provided  that  the 
trade  of  the  company  should  be  that  of  banking,  including  the  issuing  of 
bank  notes  and  bills,  payable  on  demand  after  sight,  after  date  or  other- 
wise, and  the  making  of  loans  and  advances  to  customers,  and  other  per- 
sons, on  real  or  personal  security,  on  sheep,  cattle,  &c,  and  on  every 
other  kind  of  property  whatsoever,  including  the  discount  of  bills  of  ex- 
change, &c,  the  borrowing  or  taking  up  money  at  interest  on  inland  or 
foreign  bills  of  exchange,  or  promissory  notes,  bonds,  debentures,  de- 
posit receipts,  or  other  obligations,  as  should  from  time  to  time  be  deemed 

(x)  Bank  of  Australasia  v.  Breillat,  6  Moo.  P.  C.  194;  supra,  pp.  525,  526  ;  see 
3  E.  &  B.  39. 

(?/)  See  supra,  p.  538. 

(z)  Maclae  v.  Sutherland,  3  El.  &  Bl.  1 ;  see  Com.  Dig.  Merchant,  F.  2,  F.  15. 


380         GRANT  ON  THE  LAW  OF  BANKING. 

expedient.     Large  discretionary  powers  were  also  given  to  the  din 

to  invest,  convert,  re-invest,  and  vary  the  property,  funds,  &c,  of  the 

company. 

The  capital  of  the  company  was  to  consist  of  1,000,000/.,  and  tu  be 
raised  by  30,000  shares  of  50/.  each. 

A  large  proportion  of  the  share-  allotted  was  taken  by  the  directors 
themselves;  but  of  the  calls  made  upon  these  shares,  little  or  nothing  was 
ever  paid  by  the  directors. 

In  addition  tu  the  funds  raised  by  the  allotment  of  shares  to  other  per- 
sons, the  directors  borrowed  large  -urns  of  money  upon  debentures,  or 
notes,  in  the  form  already  stated. (</) 

The  moneys  thus  raised  were  in  part  drawn  out,  and  in  part  sent  out 
to  one  of  the  directors,  who,  under  powers  of  attorney,  and  a  commission 
from  his  co-directors,  had  gone  out  to  Australia,  and  there  entered  into 
large  agricultural  and  other  speculations,  instead  of  employing  the  mo- 
neys in  the  banking  business. 

The  company  suspended  payment  in  1848;  on  winding  up  its  affairs. 
r*"-m  c^a"us  by  the  holders  of  these  instruments  *were  held  to  be 
L  -I  rightly  admitted  as  debts  against  the  company ;  for  that  the 
powers  given  by  the  deed  were  large  enough  to  authorize  the  directors  to 
borrow  money  on  such  instruments,  and  that  the  notes  were  so  framed  aa 
to  form  a  contract  binding  on  the  company,  (i) 

Transfer  of  Shares. — In  another  case,  on  the  same  deed  of  settlement, 
the  court  considered  the  effect  of  the  following  clause  : — 

"That  whenever  by  any  means  whatsoever  any  share  shall  become 
forfeited,  or  shall  be  duly  and  effectually  transferred  to  a  new  proprietor, 
then  in  such  case,  and  not  before,  the  responsibility  of  the  former  pro- 
prietor, as  a  proprietor  in  respect  of  such  shares,  shall  cease  and  deter- 
mine, and  such  former  proprietor  shall  be  exonerated  and  released  from 
all  subsequent  claims,  demands  and  obligations  in  respect  of  the  same 
shares,  and  from  all  future  observance  and  performance  of  the  covenants, 
rules,  regulations  and  provisions  affecting,  or  which  ought  to  be  observed 
or  performed  in  respect  of  such  shares ;  and  the  entry  of  such  forfeiture 
or  transfer  in  the  share  register  book  shall  be,  and  be  accepted,  legal 
evidence  of  such  forfeiture  or  transfer." 

These  expressions  were  interpreted,  in  equity,  to  mean,  that  where  a 
purchaser  of  shares  is,  upon  the  transfer,  accepted  as  purchaser  by  the 
directors,  and  the  transaction  is  completed,  the  seller  of  the  shares  is  to 
be  considered  as  discharged,  as  from  the  beginning  and  entirely,  as 
between   him   and   the   purchaser,  and,  as  between    him    and    the  coin- 

l'a")'- 

In  smli  a  case,  a  transferor  is  not  a  contributory  on  the  winding  up  of 

the  i ipany;(c)  nor  is  a  person  who,  being  an  allottee  of  shares  paid  his 

deposit  and  calls,  but  did  not  execute  the  deed  within  the  time  limited. 

■  m  the  directors  declaring  his  shares  forfeited  in  consequence,  has  sub- 

<h  e  lupra,  p.  538. 
\b)   In   re   Royal  Bank  of  Australia,  (Walker's  case,)  18  Jur.  885,  where  sec- 
clauses  of  deed. 

[e)  la  re  Royal  Bank  of  Australia,  (Suttou's  case,)  3  De  G.  &  S.  262. 


COPARTNERSHIPS,    ETC.  381 

niitted  to  the  forfeiture,  and  never  made  any  claim  upon  the  com- 
pany.^/) 

♦Generally,  directors  have  no  power  to  cancel  shares.  Even  r^E^i 
where  the  deed  of  settlement  provides  that  in  all  cases,  not  pro-  »-  J 
vided  for  hy  that  or  any  other  supplemental  deed  of  settlement,  the  di- 
rectors may  act  in  such  manner,  as  to  promote  the  interests  and  welfare 
of  the  company  :  this  does  not  enable  them  to  cancel  a  retiring  director's 
shares,  so  as  to  exempt  him  from  liability;  and  ten  years  after  he  was 
held  to  be  a  contributory. (e) 

The  same  deed  of  settlement  provided,  that  the  directors  should  have 
power  to  enter  into  any  contract  with  any  persons,  respecting  any  matter 
in  which  the  company  might  be  interested,  and  also  to  enforce  the  same, 
&c,  and  afterwards,  to  release  and  discharge,  or  modify  and  vary  the  terms 
of  any  such  contract,  &c,  and  to  compromise,  compound,  and  settle  any 
action,  suit,  claim,  or  demand,  in  which  the  company  may  be  interested, 
upon  such  terms,  and  in  such  manner,  as  the  court  of  directors  might 
think  proper.  The  deed  also  empowered  the  court  of  directors  to  pur- 
chase, for  the  use  of  the  company,  any  shares  in  the  company ;  the 
shares  which  should  be  so  purchased,  to  be  considered  part  of  the  pro- 
perty and  eifects  of  the  company,  and  be  held  and  applied  accordingly. 

The  deed  also  required  and  empowered  the  court  of  directors  to  deter- 
mine the  form  of  the  transfer  of  shares,  and  to  make  orders  and  regula- 
tions respecting  the  same,  and  declared  that  all  sales  and  transfers  not 
made  conformably  to  the  existing  regulations  in  that  behalf,  should  be 
invalid  in  law  and  equity. 

These  terms  were  held,  in  equity,  to  authorize  the  court  of  directors 
to  accept  the  resignation  of  one  of  their  own  body ;  and  afterwards  to  re- 
lease him  from  his  shares  which  he  had  taken,  and  to  hand  back  to  him 
a  promissory  note,  which  he  had  given  in  respect  of  those  shares ;  the 
resignation  of  the  office  of  director  and  the  relinquishment  of  the  shares 
being  distinct  acts,  the  latter,  subsequent  to  the  *former,  and  pee  40-1 
there  being  no  suggestion  of  fraud,  or  of  the  company  having  L  J 
been  in  failing  circumstances  at  the  time. 

It  was  also  held,  that  the  omission  of  the  forms  of  transfer  prescribed 
in,  or  by  virtue  of,  the  deed  of  settlement,  did  not  invalidate  the  trans- 
action ;  such  omission  not  arising  from  any  fault  on  the  part  of  the  ven- 

dor.(/) 

"The  directors  of  these  companies  are,  in  a  sense,  trustees,  and  have 
authority  to  bind  the  company  to  the  extent  of  the  powers  given  them 
by  the  deeds,  under  which  the  companies  are  constituted ;  but  in  the  ab- 
sence of  previous  authority,  or  of  subsequent  concurrence,  on  the  part  of 
all  the  shareholders,  the  directors  have  not,  as  I  apprehend,  any  authority 
to  bind  the  companies  in  any  matters  of  substance,  beyond  the  extent  of 
the  powers  the  deeds  may  give  them.  Moreover,  in  the  exercise  of  the 
powers  given  them  by  the  deeds,  they  must,  as  I  conceive,  keep  within 
the  proper  limits.     Powers  given  them  for  one  purpose  cannot,  in  my 

(d)  Ex  parte  Beresford,  2  Mac.  &  G.  197. 

(e)  Stanhope's  case,  3  De  G.  &  S.  198. 

(/)  In  re  Royal  Bank  of  Australia,  (Cockburn's  case,)  4  De  G.  &  S.  177. 


-j         CHANT  OX  THE  LAW  OF  EANKINC 

opinion,  be  used  for  another  and  different  purpose.  To  permit  Buch  pro- 
oeedinga  on  the  part  of  the  directors  of  companies  would  be  to  sanction 
not  the  use,  but  the  abuse,  of  their  powers  ;  it  would  be  to  give  effect  and 
validity  to  an  illegal  exercise  of  a  Legal  power, "(y) 

Now,  particularly  with  reference  to  the  transfer  of  shares,  questions 
arise,  which  the  remarks  just  offered  are  calculated  to  dispose  of.  Thus, 
there  may  be  provisions  in  a  deed  of  settlement,  empowering  din 
to  consent  to  transfers  of  shares ;  but  if  the  terms  of  those  proi  isions  and 
the  context  show  the  sense  to  be,  that  the  directors  are  to  take  into  con- 
sideration each  proposed  transfer,  then  the  deed  will  not  authorize  them 
permitting  the  retirement  of  a  body  of  shareholders  at  once  ;  for  whether 
they  shall  go  out  together,  is  a  question  involving  many  considerations, 
which  would  not  apply  to  the  retirement  of  an  individual  shareholder, 
and  *which  the  provisions  respecting  separate  transfers  would, 
L  -1  probably,  not  be  found  so  framed  as  to  authorize  the  director-  to 
entertain. (/<) 

And  as  directors  cannot  sell  their  right,  as  given  by  the  deed  of  settle- 
ment, of  objecting,  on  behalf  of  the  company,  to  any  proposed  transfer  of 
-hare.-,  so  they  cannot  exercise  the  right  of  giving  their  sanction  to  such 
proposed  transfer,  for  the  purpose,  and  upon  the  condition,  of  obtaining 
payment  of  a  debt  already  due  to  the  company  from  the  intended  trans- 
feror of  the  shares,  (t) 

In  the  case  of  ordinary  partnerships,  a  partner  can  retire  and  with- 
draw his  capital  from  the  concern  only  upon  a  dissolution  of  the  part- 
nership  ;  and  it  is  upon  taking  the  general  partnership  accouut  between 
the  parties,  that  the  right  of  setting  off  the  debt  of  each  partner,  in  ac- 
couut with  the  partnership,  arises. 

The  essential  distinction  between  a  banking  copartnership,  on  a  large 
scale,  and  an  ordinary  common  law  trading  partnership,  consists  in  the 
power  and  privilege  which,  by  the  provisions  of  the  deed  of  settlement 
of  the  former,  arc  given  to  a  proprietor  to  retire  and  withdraw  his  capital 
from  the  concern,  without  a  dissolution  of  the  partnership,  by  transferring 
his  Bhares.  This  power  and  privilege  constitute  very  main  inducement! 
to  the  investment  of  capital  in  such  concerns,  and  thereby  enable  the  so- 
ciety, or  partnership,  to  raise  a  capital  and  carry  on  transactions,  which 
it  would  be  impracticable  to  raise,  or  carry  on,  upon  the  basis  of  an  ordi- 
nary mercantile  partnership.  The  consequences  which,  as  between  a 
shareholder  and  the  company,  arise,  by  operation  of  law  alone,  tipon  a 
transfer  of  shares,  cannot,  therefore,  be  inferred,  from  those  which  at- 
tach upon  the  dissolution  of  an  ordinary  partnership.  The  consequences 
arising  upon  a  transfer  of  share-  must  be  sought  for  in  the  provisi 

the  *deed  of  settlement,  or  in  some  rule  of  law  not  repugnant  to 
L        J  those  provisions. (A) 

The  deed  of  settlement  of  a  banking  copartnership  declared,  that  no 

(g)  Per  Turner,  Ld.  Just.,  in  Ex  parte  Bennett,  24  L.  J.,  Chanc.  134. 

_■  I  L.  J.,  Chanc.  134.     Acceptance  by  directors  of  re-transfer  of  Bh 
De  G.  k  S.  24  i. 
Pinkettv.  Wright,  2  Hare,  120. 
(*)   Per  Turner,  V.  C,  2  Hare.  130,  131. 


COPARTNERSHIPS,    ETC.  383 

transfer  of  shares  should  be  permitted,  except  upon  notice  to  the  directors, 
and  on  the  consent  thereto  of  a  board  of  directors,  such  consent  being 
signified  by  a  certificate,  in  writing,  signed  by  three  directors,  at  the 
least ;  if  such  consent  were  refused,  the  shareholder  might  require  the 
directors  to  buy  his  shares  at  the  market  price  of  the  day.  After  a  con- 
sent given,  the  name  of  the  transferee  was  entered  in  the  share  register 
book,  and  the  entry  there  was  conclusive  against  him.  No  shareholder 
could  compel  an  inspection  of  the  books  of  the  company ;  they  were  ex- 
pressly excluded  from  this  by  the  deed. 

These  being  the  principal  provisions  of  the  deed,  as  to  this  matter,  A., 
a  shareholder,  proceeds  to  transfer  his  shares  to  various  persons,  and 
sends  the  proper  notices  to  the  directors ;  receives  back  consents,  signed 
by  three  directors,  respectively ;  and  completes  the  transfers ;  the  trans- 
ferees' names  were  entered  in  the  share  register  book  ;  and,  in  the  return 
made  to  the  inland  revenue,  the  name  of  A.  is  omitted  from  the  list  of 
shareholders,  and  inserted  in  the  list  of  those  who  had  ceased  to  be  share- 
holders. The  transferees  afterwards  received  the  regular  notices  of  meet- 
ings of  shareholders,  &c. 

The  directors,  subsequently,  sought  to  impeach  these  transfers,  on  the 
ground  of  the  notices  never  having  been  submitted  to  a  board  of  directors, 
nor  the  consent  given  by  a  board  of  directors,  as  required  by  the  deed, 
but  that  the  consents  had  been  signed  by  the  managing  director,  and 
then  signed  by  two  other  directors.  This  appeared  to  have  been  the 
mode  of  transacting  this  description  of  business  ever  since  the  formation 
of  the  company. 

The  House  of  Lords  decided,  that  the  directors  could  not,  on  the  cir- 
cumstances, set  up  their  own  want  of  observance  of  *the  formali-  r^rtp-i 
ties  required  by  the  deed,  as  a  ground  on  which  to  fix  A.  with  L  J 
liability,  as  continuing  to  be  a  shareholder,  for  that  they  were  bound  by 
their  course  of  dealing.  (l\ 

It  is  to  be  observed  that,  on  the  same  facts  as  those  just  stated, (m) 
(except  that  the  register  was  excluded,)  a  court  of  law  had  previously 
held  A.  to  remain  a  shareholder,  as  to  creditors  of  the  bank,  as  there  was 
no  consent  by  a  board  of  directors,  and,  considering  that  the  irregular 
mode  of  transfer,  though  adopted  for  some  years,  was  wholly  ineffectual, 
and,  consequently,  that  A.  remained  a  shareholder,  as  to  creditors  of  the 
banking  copartnership. (n\ 

The  question  before  the  House  of  Lords,  however,  was,  whether  the 
directors  could  take  advantage  of  their  own  laches  to  comply  with  the 
requirements  of  the  deed  of  settlement,  and  treat  A.  as  a  member,  when, 
but  for  their  own  conduct,  there  would  have  been  no  pretence  for  doing 
so. 

It  much  behoves  a  shareholder,  therefore,  who  wishes  to  transfer,  to 
see  that  all  the  formalities,  which  may  have  been  imposed  by  the  deed, 


(I)  Bargate  v.  Shortridge,  5  H.  Lds.  297 ;  see  7  M.  &  W.  574. 
(m)  See  supra,  p.  545. 

(n)  Bosanquet  v.  Shortridge,  4  Exch.  699;   see  5  H.  Lds.  305,  313,  314,  322, 
323. 

"  March,  1857.— 26 


;;v4         GRANT  ON  THE  LAW  OF  BANKING. 

on  the  transfer  of  shares,  be  complied  with,  otherwise  he  may  remain 
liable  to  creditors,  though,  it  Beems,  he  would  not  be  so  fur  calls. 

One  duty  of  a  copartnership,  i.  e.,  of  its  directors,  obviously  is  to  keep 
correct  transfer,  and  share  register  books,  &c,  because  they  are  required, 
by  the  Btatnte,  to  make  returns,  from  time  to  time,  of  their  existing,  and 
also  of  those  persons  who  have  ceased  to  be,  members  ;  ami  they  neve* 
i  an  perform  that  duty,  according  to  the  intention  of  the  act  of  parlia- 
ment, unless  the  1 ks  are  correct,  (o) 

The  case,  iu  the  House  of  Lords,  does  not  touch  the  principle,  that 
when  directors  do  an  act  which  is  clearly  not  within  their  power,  and  to 
which  they  never  could,  by  any  *form,  or  any  ceremony,  have 
L  'J  given  vitality,  such  an  act  is  perfectly  void,  and  cannot  be  main- 
tained, (p) 

Directors,  who,  having  the  means  of  seeing  that  all  the  formalities  of 
transfer  required  by  the  constitution  are  complied  with,  negleot  to  do  so, 
allow  there  to  be  a  want  of  formality  in  the  transfers  of  their  own  share-. 
remaiu  contributories  with  respect  to  them. (q\ 

A  shareholder  is  not  bound  to  have  a  knowledge  of  what  is  contained 
in  the  books  of  the  company ;  nor  is  bound  by  acquiescence  in  the  entries 
in  those  books. (/•) 

Enhancing  J'rices  of  Shares. — In  addition  to  the  cases  which  have 
been  cited, (s)  showing  the  effect  of  proceedings,  by  the  directors,  for  the 
sake  of  "sending  up"  the  shares  in  the  market,  another  attempt,  of  the 
aame  kind,  may  be  stated,  in  case  of  a  bank  copartnership,  at  Calcutta. 
which  was  contrived  in  this  way  : — 

One  of  the  directors  prevailed  upon  several  persons  to  join  him,  for 
the  purpose  of  buying  shares  of  the  bank;  they  applied  to  the  bank  for 
a  credit,  on  their  joint  and  several  securities,  to  be  opened  for  the  pur- 
pose of  purchasing  these  shares:  this  was  granted  by  the  directors;  the 
account  was  operated  on,  by  drawing  on  it  for  the  payment  of  the  share-. 
when  bought,  and  paying  into  it,  when  money  was  raised  on  the  shares, 
and  elsewhere ;  a  total  loss  ensued  ;  the  bauk  failed  ;  the  director,  with 
the  parties  who  had  joined  him  in  the  speculation,  being  debtors  to  the 
hunk  to  an  immense  amount. 

Now,  in  this  case,  two  points  were  obvious: — 

First,  the  deed  of  settlement  expressly  prohibited  loans  being  made 
without  any  security;  here  the  advances  had  been  made  with  no  secu- 
rjtcjQ-i  rity,  in  the  sense  of  the  deed  ;  the  ^transaction  of  the  opening 
-I  the  credit  was,  therefore,  a  breach  of  trust,  in  one  and  all  the 
directors  concerned,  and  a  breach  of  trust  of  no  ordinary  importance,  be- 
cause  it  is  manifest,  thai  such  a  prohibition  must  constitute  the  chid' 
safeguard  for  the  shareholders,  that  their  capital  shall  not  be  perilled. 

Secondly,  the  purpose  for  which  the  money  was  so  to  be  lent  to  these 
person-,  was  to  be  applied  for  the  purchase  of  the  bank  shares,  at  B  certain 
prioe, — it  was  intended,  (dearly,  to  raise  the  price  of  the  bauk  shares  out 

Per  Ld.  St.  Leonards,  5  B.  Lds.  318,  319. 

(/•!   B  II.  Lds.  328;  see  1  De  G.,  M.  &  '■ 

iy    l.\  p.irii  Brown,  L9  Bi  parte  Henderson,  id.  107. 

toe  L9  Bear.  104  (*)  See  supra,  p.  528,  et  se<j 


COPARTNERSHIPS,    ETC.  885 

of  the  moneys  of  the  hank  itself,— to  create  for  those  shares  a  false  de- 
mand, the  end  being  to  deceive  the  shareholders  and  the  public.  Now, 
no  circumstances  of  embarrassment,  no  difficulty,  can  excuse  pourtraying 
in  false  and  delusive  colours,  the  condition  of  the  affairs  of  the  bank  en- 
trusted to  the  charge  of  the  directors ;  no  hope  of  saving  a  falling  com- 
pany can  justify  a  violation  of  the  deed,  by  misappropriating  the  funds 
committed  to  their  care  in  such  manner. (f!) 

Directors,  fraudulently  inducing  a  person  to  purchase  shares,  may  be 
personally  liable  to  such  person  ;(«)  but,  to  prove  fraud  against  them,  does 
not  tend  to  fix  the  shareholders,  in  general,  with  fraud ;  a  person  clearly 
showing  the  latter  would,  probably,  escape  being  made  liable  as  a  con- 
tributory ;  but  the  directors  are  not  the  agents,  of  the  shareholders,  to 
commit  a  fraud ;  and  the  directors'  fraud  is  no  reason,  in  itself,  why  a 
person  should  not  be  placed  on  the  list  of  contributors. (x) 

The  same  rule  obviously  holds,  where  the  fraud  has  been  that  of  the 
manager,  who  is  accredited  by  the  directors. {y\ 

A  misrepresentation  of  the  state  of  the  concern,  made  by  the  law  agent 
of  the  company,  whether  he  was  or  was  not  a  partner  in  it,  does  not  re- 
lease from  obligation,  in  respect  to  ^shares,  a  person,  who  pur-  -;|,,,.1 
chases  shares,  after  such  representation,  although  it  was  wholly  L  J 
incorrect  and  untrue;  for  the  law  agent  is  not  the  agent  of  the  company, 
to  bind  it  in  such  matters,  as  the  representation  related  to. (2) 

Directors  representing,  with  the  intent  to  raise  the  shares  of  the  com- 
pany in  price,  in  their  reports,  and  by  their  agents,  that  the  affairs  of 
the  company  are  in  a  very  prosperous  state,  and  declaring  large  dividends, 
at  a  time  when  those  affairs  were  greatly  embarrassed,  and  thereby  induc- 
ing a  person  to  purchase  shares,  may  be  made  criminally  responsible  for 
their  conduct. (a) 

Winding  tip. — In  case  it  be  asked,  whether  any,  and  what  means 
exist,  on  behalf  of  the  shareholders,  of  enforcing  their  duties  upon  the 
directors  of  a  banking  copartnership,  it  is  answered,  (and  it  seems  to  be 
nearly  all  there  is  to  answer,  for,  in  truth,  shareholders  have  few  practi- 
cal means  for  effecting  this  result,)  that,  in  certain  cases,  the  courts  of 
equity  will  decree  an  account. 

Thus,  where  the  company  had  suspended  business  for  several  years, 
but  was  not  dissolved ;  large  debts  were  due  from  the  company,  for  which 
the  shareholders  were  liable ;  considerable  assets  were  in  the  hands  of 
the  directors  and  trustees  of  the  company,  though  not  equal  to  the  debts  ; 
all  the  directors,  except  one,  had  become  bankrupt,  and  had  thereby,  by 
the  regulations  of  the  deed  of  settlement,  become  incapable  of  acting, 
and  the  trustees  refused  to  act ;  certain  shareholders,  who  had  paid  all 
the  calls  that  had  been  made,  were  allowed  to  bring  a  bill  for  an  account 
against  the  directors,  and  the  trustees,  and  the  public  officer,  and  the 
shareholders  who  had  not  paid  up  their  calls,  praying  that  an  account 

(t)  In  re  Grant,  7  Moo.  P.  C.  141. 

(u)  Ex.  gra.  Stainback  v.  Fernley,  9  Sim.  556  ;  see  2  H.  Lds.  509. 

(x)  Dodgson's  case,  3  De  G.  &  S.  90,  remarking  on  Sanderson's  case,  id.  66. 

(y)  Bernard's  case,  5  De  G.  &  S.  289. 

(z)  Burnes  v.  Pennell,  2  H.  Lds.  497.  (a)  2  H.  Lds.  509. 


330  HIIANT    ON    THE    LAW    OF    BANKING. 

might  be  taken  of  all  the  partnership  assets,  and  that  such  part  as 

^.ft-.  outstanding  might  be  g«>t  in  by  a  *receiver,  and  that  the  whole 
L  J  might  be  converted  into  money  and  applied  towards  satisfaction 
of  the  partnership  debts,  without  praying  for  a  dissolution  of  the  copart- 
nership :  the  object  of  the  bill  beiug,  not  to  obtain  a  share  of  the  profits 
doe  to  the  plaintiffs,  but  to  have  the  common  usetfl  realized  and  applied 
to  their  legitimate  purposes,  in  order  that  the  plaintiffs  might  be  relieved 
from  the  responsibility  to  which  they  were  exposed,  contrary  to  the  provi- 
sions of  the  contract  into  which  they  had  entered,  and  to  every  principle 
of  justice. (//) 

This  was,  in  fact,  a  proceeding  for  the  purpose  of  winding  up(c)  the 
affairs  of  the  company,  and  was  before  the  legislation  known  as  the 
Winding-up  Aets  ;  but,  it  seems,  that  such  a  proceeding  may  be  resorted 
to,  with  effect,  since  those  acts,  at  any  rate  where  the  bill  seeks  relief, 
which  could  not  be  had  under  a  winding-up  order.(rj 

So  the  company,  by  its  public  officer,  may  institute  a  suit  in  equity 
against  a  director,  or  directors,  who  have  misconducted  the  company's 
affairs. (r?) 

The  joint-Stock  Companies  Regulation  Act,  19  &  20  Vict.  c.  47,  does 
not  affect  banking  copartnerships  or  other  bodies  associated  for  the  pur- 
poses of  banking ;  therefore,  the  winding  up  of  such  bodies  still  proceeds 
under  the  old  Winding-up  Acts. 

If,  pending  a  suit  by  the  shareholders  of  a  banking  copartnership 
against  the  directors,  one  of  those  directors  obtains  an  order  for  winding 
up  the  affairs  of  the  company,  under  the  Winding-up  Act,  1848,  and 
then,  after  some  time  has  elapsed,  the  shareholders  move,  that  all  further 
r*.-  -n  proceedings  in  the  suit  be  stayed,  until  the  affairs  of  the  com] 'any 
L  &&iJ  *h;l<]  been  wound  up,  under  the  order,  their  motion  will  be  re- 
fused with  costs,  (e) 

The  object  of  the  suit,  which  was  instituted  in  1842,  was,  in  fact,  the 
winding  up  of  the  affairs  of  the  company,  and  for  the  purpose  of  charg- 
ing the  directors  with  sums,  which,  but  for  their  wilful  default,  they 
might  have  received,  and  with  other  misconduct,  &c,  and  seeking  an 
injunction,  &c,  and  the  delivery  up  of  certain  promissory  notes.  And 
it  was  considered  to  be  clear,  the  winding-up  order  was  not  adapted  to 
give  as  much  relief  as  was  to  be  had  in  the  suit.(/)  In  fact,  it  was 
held,  that  the  suit  must  necessarily  be  disposed  of  before  the  winding  up 
could  take  place. (^) 

(b)  Wallworth  v.  Holt,  4  My.  &  0.619,634,636;  Bee  Barker  v.  Buttress,  7 
134,  137  ;  and  see  15  Jur.  853;   Richardson  v.  Hank  of  England,  4  My.  &  C. 

105. 

(c)  See  Deeks  v.  Stanhope,  l  Sim.  N.  B.  I  15  Jar.  618;  cor.  Ld.  Cran- 
worth,  V.  C. 

(d)  Harrison  v.  Brown,  '■>  De  G.  I  De  <;..  M.  &  G.  590. 

(e)  i  -:  mhope,  1  Bim.  X.  S.  139.     The  bill  by  the  shareholders  against 

of  the  court  (five  time  i  often.  The 

Boil  had  pended  nine  years. 

(f)  See  1  Sim.  \.  8.  448,  449  ;   11  &  12  Vict.  c.  45,  s.  14. 

!n  re  St.  Uarylebone  Banking  Company,  1  Hall  k  T.  100,  103;  see  1  Sim. 
i  i  Sim.  57.     The  pendency  of  a  Bait  is  not  an  objection  to  courts  mak- 
ing  a  winding-op  order,  )i  A  12  Vict  i     16,  3.  58. 


COPARTNERSHIPS,    ETC.  3S7 

On  the  other  hand,  after  steps  have  been  taken,  under  the  Winding- 
up  Act  of  1848,  and  proceedings  have  gone  so  far  as  the  appointment 
of  an  official  manager,  no  creditor  or  other  person  can  commence  or  pro- 
ceed with  any  action  against  the  company,  or  any  other  person  represent- 
ing the  same,  &c,  except  so  far  as  the  master  shall  permit,  &c.  :  and  a 
judge  at  chambers  may  order,  further  proceedings  to  be  stayed. (h\ 

But  an  action  against  a  party,  sued  individually,  as  one  of  the  joint  and 
several  makers  of  one  of  the  promissory  notes  of  the  Royal  Bank  of 
Australia,  was  held,  not  to  be  a  case  within  that  enactment;  it  was  con- 
sidered to  be  just  the  same  case,  as  if  the  defendant  had  been  sued  upon 
his  promissory  note,  made  by  him  in  his  individual  character,  and  having 
no  connection  whatever  with  the  company ;  he  was  held  to  be  personally 
liable  on  the  promissory  note. (i\ 

^Dividends. — The  payment  of  dividends,  derived  from  other  r-^eern 
sources  than  the  profits  of  the  company,  is  a  fraud  on  the  part  «-  "'J 
of  the  directors ;  for,  dividends  are  supposed  to  be  paid  out  of  the  profits 
only,  and  when  directors  order  a  dividend  to  any  given  amount,  they, 
without  expressly  saying  so,  yet,  impliedly,  do  declare  to  the  world  that 
the  company  has  made  profits,  which  justify  such  a  dividend.  This  is 
a  gross  fraud,  for  which  they  are  liable  to  be  punished. 

In  case  any  one,  in  consequence  of  such  implied  misrejyresentations, 
buys  shares,  and,  it  appearing,  that  the  concern  is  failing,  &c,  he  is 
injured,  he  may  proceed  against  the  directors  by  action ;  they  are  liable, 
also,  to  be  indicted  in  such  case  :  even  if  no  one  can  be  shown  to  have 
been  injured,  as  a  matter  of  strict  law,  they  arte  liable  to  indictment  for 
a  conspiracy.  (&) 

But  this  alone  would  not  be  sufficient  to  enable  the  party  to  set  aside 
the  contract  as  against  the  directors ;  it  is  not  enough  for  him  to  say, 
"  unless  you  had,  by  paying  dividends,  thereby  making  the  public  believe 
you  were  paying  them  out  of  profits,  given  this  flourishing  appearance  to 
the  concern  by  your  own  acts  and  deeds,  I  should  never  have  bought 
my  shares :"  such  a  general  averment  of  fraud  is  not  enough ;  it  must 
be  dolus  dans  locum  contractui.fl) 

On  the  other  hand,  no  man  can  complain  that  another  has  too  implicitly 
relied  on  the  truth  of  what  he  has  himself  stated,(m)  and  where  one  of 
the  parties  to  a  negotiation  induces  the  other  to  contract,  on  the  faith  of 
representations,  any  one  of  which  is  untrue,  the  whole  contract  is  to  be 
considered  as  having  been  obtained  fraudulently,^*)  and  the  party  making 
the  representations  may  be  compelled  to  make  good  the  representation, 
if  that  be  possible ;  if  not,  the  person  *deceived  may  avoid  the  r*^-! 
contract:  and  it  does  not  signify  that  the  party  making   the  L 

(h)   11  &  12  Vict.  c.  45,  s.  73. 

(i)  Penkivil  v.  Connell,  5  Exch.  381,  384,  385  ;  Maclae  v.  Sutherland,  3  El.  &  Bl. 
37  ;  see  3  Exch.  3,  and  form  of  note,  sup.  p.  538. 

(k)  Burnes  v.  Pennell,  2  H.  Lds.  524,  525. 

(I)  Burnes  v.  Pennell,  2  H.  Lds.  530 ;  see  Jennings  v.  Broughton,  22  L.  J.,  Ch. 
585;  S.  C,  17  Beav.  234. 

(m)  Dobell  v.  Stevens,  3  B.  &  C.  625. 

\n)  Revnell  v.  Spry,  1  De  G.,  M.  &  G.  660. 


GRANT  ON  THB  LAW  01  BANKING. 

representation  believed  it  to  be  true,  if  it  was  bis  duty  to  bave  known 
otherwise,  (o) 

Bence,  a  representation  by  directors,  in  a  prospectus,  on  the  formation 
of  a  company,  is  a  representation,  dans  locum  contractui,  as  regards  per- 
sons taking  shares,  and  tlie  contract  may  be  avoided,  if  it  be  impossible 
that  the  representation  can  be  made  good.(o) 

For/'  iting  Shares. — The  subscription  contract  of  a  projected  banking 
company,  after  reciting  that  the  capital  was  agreed  to  consist  of  1,000,000/., 
with  power  to  increase  it  to  3,000,000/.,  and  that  application  bad  been 
made  to  the  crown  for  a  charter,  nominated  certain  persons  to  be  directors, 
until  the  charter  should  be  obtained,  with  power  for  them  to  regulate 
the  terms  of  the  charter,  in  such  manner  as  they  should  think  necessary, 
in  compliance  with  the  regulations  of  the  government,  and  to  narrow 
or  extend  the  objects  of  the  company,  as  might  be  necessary  for  that 
purpose. 

The  directors  were  also  empowered,  as  soon  as  the  charter  was  sealed, 
to  prepare  a  deed  of  settlement,  to  call  for  a  first  instalment  from  the 
Hil^cribers,  and  to  declare  forfeited  the  shares  of  any  subscribers  who  did 
not  execute  such  deed  of  settlement. 

The  charter  that  was  obtained  incorporated  the  company,  with  a 
capital  of  644,000/.,  and  power  to  increase  it  to  1,000,000/.,  with  the 
consent  of  the  lords  of  the  treasury. 

Then  a  call  was  made,  and  a  deed  of  settlement  prepared,  which 
recited  the  charter,  the  call,  and  its  payment,  by  the  parties  to  the 
deed. 

On  these  facts  it  was  very  solemnly  decided, Qj)  that  the  power  of  the 
directors  was  not  terminated  on  the  grant  of  the  charter;  that  the  charter 
was  not  inconsistent  with  the  subscription  *contract;  that  the 
L  -J  call  was  properly  made;  that  the  deed  of  settlement  was  binding 
on  the  subscribers  to  the  subscription  contract ;  but  that  as  the  deed  of 
settlement  made  recital  of  the  payment  of  the  call,  and  the  power  to 
forfeit  shares  subsisted  only  for  the  non-execution  of  the  deed  of  settle- 
ment, therefore  the  directors  had  no  power  to  forfeit  for  non-execution 
of  the  deed.(^>) 

Cheques, — Directors  sometimes  keep  blank  cheques,  with  their  signa- 
tures already  set  to  them  in  the  cheque-book,  the  requisite  amounts  being 
filled  in  as  the  cheques  are  wanted. 

It  is  most  important  to  be  known,  that  for  a  secretary  or  clerk,  or  any 
one  connected  or  unconnected  with  the  company,  to  fill  up,  without 
authority  so  to  <l>>.  such  a  cheque,  with  a  sum  in  favour  of  himself,  even 
though  the  sum  might  be  owing  to  him  from  the  company,  is  most  pro- 
bably  forgery.(y) 

/;///,  of  Exchange. — Directors  accepting  a  bill  of  exchange  in  their 
own    names,  simply,  without   saying   that  they  do  so  as  agents  of  the 

(o)  Pulsford  v.  Richards,  IT  Beav.  87;  Jennings  v.  Bronghton,  id.  234. 

Norman   v.  Mitchell,  5  De  <:.,  M.   &  6.  648,  cor.  the  Lords  Justices  and 
...  l!  and  Brie,  JJ. ;  see  14  Q.  B.181. 

!  lower  v.  Shaw,  2  Car.  &  K.  703  :  see  Reg.  v.  Wilson,  17  L.  J.,  Mag.  C. 

-. 


COPARTNERSHIPS,    ETC.  389 

copartnership,  will  be  personally  liable  on  the  bill,  whether  they  have, 
or  have  not,  authority  to  accept  bills,  on  behalf  of  the  company,  (r) 

So,  if  directors  sign  a  joint  and  several  promissory  note,  they  will  be 
personally  liable,  whether  they  have  authority  or  not,  to  issue  promissory 
notes ;  if  directors,  "  for  themselves  and  the  other  members  of  the  com- 
pany, jointly  and  severally  promise,"  &c,  such  an  instrument  may  bind 
the  body  of  the  copartnership,  i.  e.,  the  whole  of  them  jointly,  but 
cannot  bind  them  severally. (s) 

*In  questions  of  this  kind  it  sometimes  is  useful  to  bear  in  r^-.-.-n 
mind  the  principle,  that  a  bill  of  exchange  cannot  be  addressed  L 
to  one  person  and  accepted  by  another.  (/) 

Contracts. — Directors  will  not  be  liable,  as  on  a  contract,  in  such  cir- 
cumstances as  the  following  : — 

An  extraordinary  general  meeting  of  proprietors  is  duly  called,  and 
passes  resolutions,  putting  an  end  to  the  partnership — that  being  the 
purpose  of  the  meeting, — and  the  object  to  be  eifected  by  the  resolu- 
tions— the  company  is  dissolved ;  whereby  the  authority  of  the  directors 
to  bind  the  other  shareholders  is  put  an  end  to;  it  becomes  necessary, 
therefore,  to  make  arrangements  for  realizing  the  assets,  and  discharging 
the  liabilities  of  the  company,  and  dividing  the  surplus.  Without  such 
an  arrangement  any  one  of  the  shareholders  might  receive  payment  of 
the  debts  due  to  the  company;  each  shareholder  would  have  to  concur  in 
the  indorsing  and  disposing  of  the  securities  of  the  company,  and  in  set- 
tling the  engagements  into  which  they  had  entered,  during  their  part- 
nership :  the  course  the  meeting  took  was,  to  place  the  winding  up  of  the 
concerns  in  the  hands  of  a  few  members,  who  were  most  able  and  quali- 
fied for  the  purpose,  namely,  the  late  directors. 

But  members  taking  upon  them  such  a  trust  do  not,  though  they  join 
in  resolutions,  providing  that  the  assets  shall  be  realized,  and  as  soon  as 
they  are  so,  dividends  shall  be  declared  and  paid,  by  the  act  of  taking 
upon  them  the  trust  simply,  bind  themselves  to  declare  and  pay,  &c.  the 
dividends ;  and  a  shareholder,  to  whom,  on  assets  being  realized,  a  divi- 
dend is  in  point  of  fact  due,  cannot  sue  those  persons,  as  upon  a  contract, 
at  law,  in  order  to  recover  the  dividend. 

Those  persons,  however,  might  be  liable  in  equity  as  trustees  for  the 
shareholders,  but  only  as  bare  trustees,  not  as  being  bound  by  their  own 
contracts,  in  the  terms  of  the  Resolution ;  and  although  it  should  p^-i 
appear  that  a  sum  of  money,  in  respect  of  realized  assets,  were  L  J 
actually  in  their  hands,  and  though  they  should  have  actually  declared  a 
dividend  of  so  much  in  the  pound,  to  be  paid  on  condition  of  their  being 
indemnified,  &c,  that  would  not  entitle  any  shareholder  to  sue  them  at 
law,  as  for  money  had  and  received,  to  his  use,  in  respect  of  the  propor- 
tion due  to  him  at  that  rate  on  his  share.(«) 

Liabilities  of  Shareholders. — Partners  who  are  desirous  of  escaping 

(r)  Byles  on  Bills,  6th  edit.  26,  54  ;  Nicliolls  v.  Diamond,  23  L.  J.,  Exch.  1 ;  and 
see  Fox  v.  Frith,  10  M.  &  W.  131. 

(s)  Maclae  v.  Sutherland,  23  L.  J.,  Q.  B.  229. 

(t)  Davis  v.  Clark,  6  Q.  B.  16. 

(w)  Lyon  v.  Haynes,  5  M.  &  Gra.  504. 


GRANT  ON  THE  LAW  OF  BANKING. 

from  an  undertaking  of  this  kind,  which  turns  out  unsatisfactorily,  may, 
in  Bome  rases,  hope  to  do  bo  by  means  of  the  Winding-up  Acts.  An  ap- 
plication may  be  made  fox  a  winding-up  order,  in  cases  where  it  does  not 
appear  that  there  are  any  creditors  of  the  company.  That  is  not  at  all 
essential  to  found  the  jurisdiction  under  these  statutes;  they  are  not  con- 
fined to  companies  which  hare  creditors  j  their  object  is  not  merely  to 
pay  the  debts  of  the  companies;  but  to  enable  those  who  have  entered 
into  these  speculations,  to  escape  from  them  as  far  as  possible. 

On  the  other  hand,  the  statutes  were  not  intended  to  apply  to  a  body 
which  was  going  on  with  fair  prospects,  in  the  exercise  of  its  trade,  or 
business,  so  as  to  enable  any  dissatisfied  member  to  call  upon  the  courts 
to  grant  a  winding-up  order.  Evidence  must  be  given,  that  the  company 
in  question  cannot  carry  on  the  business,  and  that  the  difficulties  are 
found  to  be  insuperable  in  disentangling  the  parties  from  the  the  concern 
in  which  they  are  engaged  ;  that  will  show  a  state  of  things  to  which  the 
Winding-up  Acts  apply. (x) 

When  a  deed  of  settlement  renders  necessary  the  performance  of  cer- 
tain acts,  before  a  person  can  be  a  member  of  the  copartnership ;  the  case 

pi .  usually  is,  that  the  acts  are  *for  the  benefit  of  the  body,  and  the 

L  J  non-performance  of  them  does  not  enable  the  party  to  retire  from 
his  contract  with  the  company.(y) 

In  practice  it  is  not  found  to  be  sufficient,  for  the  purpose  of  enabling 
members  to  retire,  who  may  wish  to  do  so,  upon  discovering  the  affairs 
of  the  body  are  becoming  unprosperous,  or  when  they  become  dissatisfied 
with  the  management,  and  are  unable  to  influence  the  course  of  it  for  the 
better,  that  there  should  be  contained  in  the  deed  of  settlement  provi- 
enabling  the  company  to  become  purchasers  of  shares,  with  the  con- 
sent of  a  general  meeting  of  shareholders,  and  for  shareholders  procuring 
persons  to  be  transferees  of  their  shares,  with  the  consent  of  the  directors ; 
because,  in  general,  one  or  other  of  these  consents  it  is  found  impracti- 
cable to  obtain. (?) 

It  is  not  even  sufficient  for  this  purpose,  to  introduce  powers  for  the 
directors  to  act,  in  all  cases  not  provided  for  by  the  deed,  in  such  manner 
as  to  promote  the  interests  and  welfare  of  the  company;  and,  although 
the  directors  in  such  case  assume  the  power  to  allow  a  member  to  retire, 
and  profess  to  release  him  from  liabilities,  yet,  if  this  be  inconsistent 
with  express  prohibitions  in  the  deed,  he  may  be  liable  for  debts  of  the 
company,  in  equity,  even  ten  years  after  his  supposed  retirement  has 
t  ken  place. (a) 

We  musl  remember  that  in  common  law  partnerships,  retirement  of 
one  or  more  members  can  only  be  made  with  consent  of  the  whole,  and 


(z)  In  re  St.  Marylebone  Banking  Company.  1  Hall  k  T.  102,  103,  cor.  Ld.  Cot- 
iii,  O.j  11  k  12  Vict  <■.  46,  s.  B,  art.  7.  To  a  Kill  for  the  dissolution  of  such 
c  'partnership,  all  the  members  must  have  been  made  parties,  Abraham  v.  Haunay, 
13  Sim.  58  I. 

(>/)   Humes  v.  I'enncll.  2  II.  Ldt.  496. 

(z)  See  K>.  part.-  Bennett,  24  L.  J.,Chanc.  131. 

(•/)  In  r<-  St.  Marylebone  Banking  Company,  (Stanhope's  case,)  3  De  G.  k  S. 
198. 


COPARTNERSHIPS,    ETC.  391 

upon  a  dissolution  of  the  partnership  ;  in  these  copartnerships  the  shares 
are  made  transferable,  but  how  transferable  ?  commonly,  by  the  consent 
of  the  directors.  Now,  the  directors  are  trustees  for  the  shareholders, 
and  cannot  depart  from  the  terms  and  spirit  of  the  deed  of  settlement, 
which  imposes  the  trust  upon  them.  *Can  it  be  supposed,  or  pitcRo-i 
j) resumed,  to  have  been  in  the  contemplation  of  the  parties  who  L  J 
originally  agreed  to  the  deed,  that  the  directors  should  sell  that  consent, 
or,  in  other  words,  sell  their  right  of  objecting  to  any  person  who  might 
be  proposed  as  transferee  of  a  member  wishing  to  retire  ?  It  can  seldom, 
or  never,  be  for  the  real  interests  of  the  body,  that  they  should  be  allowed 
to  do  so.(M  It  is  not  wholly  unlike  bribing  the  servant  to  allow  the 
master  to  be  cheated. 

One  ground  is  this  :  a  person  becoming  a  member  of  a  copartnership, 
upon  false  representations  made  not  to  him  alone,  but  to  him  and  other 
members,  cannot  be  entitled,  on  that  ground,  to  a  decree,  for  the  re-pay- 
ment of  his  subscriptions,  to  which  the  other  members  would  not  be 
equally  entitled,  and  if  he  be  entitled  to  such  repayment,  he  cannot  ob- 
tain that  relief  in  the  absence  of  the  other  members ;  and  that  absence 
will  not  be  sufficiently  accounted  for,  by  alleging  in  the  bill  that  the 
complainant  is  ignorant,  and  unable  to  discover  who  the  other  share- 
holders were,  at  least,  when  it  appears  also  on  the  bill,  that  the  deed  of 
settlement  of  the  company  is  enrolled  in  court,  that  the  plaintiff  had  seen 
the  deed,  and  what  were  the  number  of  shares  which  were  subscribed 
for  thereupon. (A 

Even  if  the  complainant  has  not  this  common  interest  with  the  other 
members  of  the  company,  if  he  alleges  that  he  alone  has  been  inveigled 
into  becoming  a  member  by  misrepresentations,  which  apply  to  himseli 
alone,  still  he  must  make  all  the  other  members  of  the  company  parties 
to  the  bill,  in  order  to  examine  these  questions,  for  when  he  asks  to  have 
his  capital  restored,  he  asks  that  the  interests  of  all  the  other  partners  of 
the  company  may,  to  the  extent  of  the  withdrawal  of  his  capital,  be  pre- 
judiced, (c) 

This  requirement  will,  obviously,  in  many  cases,  present  a  formidable, 
and,  perhaps,  an  insuperable  difficulty;  and,  *at  any  rate,  one  r^ccn-i 
which  can  only  be  overcome  by  a  considerable  expenditure  of  L  J 
time,  labour,  and  money. 

Again,  in  many  cases,  the  terms  of  the  deed  of  settlement  do  not  give 
powers  to  the  directors  to  authorize  the  retirement  of  a  body  of  the  share- 
holders, so  that  an  agreement  entered  into  by  the  directors  with  such 
members,  that  on  the  payment  by  them  of  a  sum  of  money,  in  discharge 
of  all  their  liabilities,  they  should  be  allowed  to  retire,  transferring  their 
shares  to  two  persons  named  by  the  directors — in  fact,  two  of  their  own 
body — was  wholly  xdtra  vires  of  the  directors,  and  could  not  be  supported  ; 
and  the  shareholders,  notwithstanding,  remained  liable  to  the  debts  of  the 
company.  (d\ 

(b)  See  24  L.  J.,  Chanc.  133. 

(c)  Macbride  v.  Lindsay,  9  Hare.  574,  584,  585,  591. 

(d)  Ex  parte  Bennett,  24  L.  J.,  Chanc.  130.  Upwards  of  3,000  shares  had  been 
transferred  as  stated  in  the  text. 


392         GRANT  ON  THE  LAW  OF  BANKING. 

Another  rase,  showing  the  difficulty  of  divesting  the  responsibilities  of 

members  of  a  copartnership  of  this  kind,  occurs,  iu  which  the  fads  were 
these  : —  . 

Mr.  Davidson  was  manager,  at  Ludlow,  of  the  branch  bank  established 

there  of  the  Commercial  Bank  df  England  j  Mr.  Ilannay  was  manager, 
and  also  shareholder  in  the  Borough  of  St.  Maryleboue  Banking  Com- 
pany. 

Ilannay  induces  Davidson  to  subscribe  the  company's  deed  of  settle- 
ment for  one  hundred  shares;  this  was  dune,  as  the  court  judicially  in- 
ferred, from  the  evidence,  for  the  purpose  of  enabling  and  accrediting  a 
fallacious  representation,  that  Davidson  bad  taken,  and  was  the  holder  of, 
those  shares  on  his  own  account,  and  at  his  own  risk;  whereas,  the  fact 
was,  that  it  had  been  arranged,  for  Davidson  merely  to  allow  his  name  to 
be  placed  on  the  list  of  shareholders,  as  owner  of  these  one  hundred  shares ; 
that  all  the  shares  which  should  not  be  transferred,  by  him,  to  other  par- 
ities, should  be  transferred,  for  him,  by  the  directors,  and  that  he  should 
receive  nothing,  nor  incur  any  liability  in  respect  of  the  shares  :  it  was 
agreed  that  the  shares  should  remain  the  property  of  the  company. 
r*"rm  *Whilst  these  one  hundred  shares  so  stood  in  Davidson's  name, 
L  J  thirty  of  them  were  disposed  of  by  him  ;  the  purchase  money  was 
paid  to  the  directors;  afterwards,  he  transferred  the  residue  to  Ilannay, 
and  his  successors,  iu  office,  in  trust  for  the  directors.  Davidson  never 
paid  any  call,  or  other  sum  of  money,  upon,  and  never  received  any  divi- 
dend or  other  sum  of  money,  in  respect  of  the  shares;  his  name  was 
never  included  in  any  return  to  the  Inland  Revenue  Office,  as  a  member, 
nor  did  his  name  stand  on  any  list,  or  register  of  members  filed  at  the 
said  office. 

The  object  of  this  proceeding  was  considered  by  the  court  to  have 
been, — that  of  inducing  and  encouraging  the  taking  of  shares,  by  per- 
sons whom  Ilannay,  or  the  directors,  might  think  it  advantageous,  or 
useful,  to  add  to  the-  company,  and  as  such,  unfair,  and  tainted  with 
deceit. 

Accordingly,  eight  years  after  the  last-mentioned  transaction,  David- 
son was  held  to  be  the  true  proprietor  of  the  seventy  shares,  for  every 
purpose  (as  between  him  and  the  other  proprietors. )(e) 

Contributories. — It  must  be  carefully  borne  in  mind,  with  reference 
to  all  cases  of  contributories,  that  the  liabilities  of  contributories  are  not 
always  equal;  each  contributory  is  not  always  liable  for  the  whole  ex- 
penditure of  the  company;  in  all  the  oases  respecting  contributories,  all 
that  is  decided,  when  the  court  orders  that  such  a  person  shall  be  placed 
<m  the  list  of  Contributories  to  such  a  company,  is,  not  that  he  is  necessa- 
rily in  precisely  the  same  situation,  with  respect  to  pecuniary  responsi- 
bility, as  everj  other  person  who  has  been,  or  may  be,  placed  upon  the 

Same  list,  but  only  that,  in  respect  of  shares  that  he  holds,  or  has  held, 
fas  his  case  may  be,)  lu-  is  liable  to  bear  some  share  or  other  iu  aid  of 
the    liabilities   of  his    fellow  members  of,   or  debtors   to   the    company. 


(•)  In  re  M;irylebune  Banking  Company,  (Davidson's  case,)  3  De  G.  &  S.  29. 


COPARTNERSHIPS,    ETC.  393 

What  he  must  eventually  pay,  as  his  proportion  *of  the  losses,  r-*rpi-i 
remains  for  further  investigation,  and  the  result  depends  on  the  L  J 
number  of  shares  he  has  held,  on  the  mode  in  which  they  were  trans- 
ferred to  him,  &c.,  the  time  during  which  he  has  held  them,  and  a 
variety  of  other  circumstances,  and  combinations  of  circumstances,  differ- 
ing in  almost  every  particular  instance. (/) 

The  Banking  Act(#)  has  no  bearing  on  the  question  of  who  are  contri- 
butories.  The  Banking  Act  grew  out  of  the  following  state  of  things  : — 
f*  There  being  great  difficulty  in  arranging  the  liabilities  of  a  fluctuating 
body,  where  the  parties,  whom  a  creditor  had  sue  as  liable,  at  the  time  of 
the  contract,  might  be  altogether  different  from  the  parties  having  the 
benefit  of  the  contract,  this  statute,  while  its  object  was  to  permit  banking 
companies  to  be  established,  intended  to  provide  that  those  dealing  with 
such  companies  should  not  be  put  to  trouble  to  find  out  who  were  to  be 
liable  as  pay-masters.  With  this  view,  therefore,  the  act  lays  down  an 
arbitrary  rule  of  liability,  and  says  that  those  shall  be  liable  to  creditors  of 
the  company  who  were  members  at  the  time  of  the  contract,  or  at  the  time 
the  goods  were  sold,  or  the  judgment  recovered,  although  they  had  nothing 
to  do  with  the  contract  or  the  goods.  It  is  an  entirely  arbitrary  rule, 
framed,  "I  apprehend,  with  a  totally  different  intent  to  that  of  regulating 
the  rights  of  members  as  between  themselves;  it  had  in  view  one  object 
and  one  object  only,  namely,  to  facilitate  the  remedies  of  creditors.  At 
the  same  time,  however,  it  had  the  effect  of  making  persons  liable  for 
debts  to  which  they  would  not  be  liable  on  the  ordinary  principles  of 
law,  and  of  fixing  on  them  debts  for  which  they  had  received  no  benefit  ; 
— as,  for  instance,  if  a  man  held  shares  when  a  contract  was  made,  and 
afterwards  sold  them  :  in  such  case,  if  an  action  was  brought  by  a  credi- 
tor, the  party  was  liable  under  the  contract,  because  he  made  the  r*K(>2~| 
^contract.  The  statute  then,  in  order  to  avoid  leaving  a  man  in  L  J 
total  uncertainty  for  how  many  years  his  estate  might  be  liable  to  the 
debts  of  a  joint-stock  company,  provides  that  all  proceedings  against  him, 
at  the  suit  of  creditors,  must  be  brought  within  three  years,  or  else,  that 
those  who  succeed  him  will  be  liable,  and  his  estate  will  be  discharged. 
It  appears  to  me,  (said  Lord  Truro,)  that  the  statute  is  here  dealing  with 
creditors,  and  creditors  only,  and  creditors  stand  in  a  different  situation 
to  members  of  the  company.  Suppose  there  were  a  number  of  debts 
owing,  having  been  owing,  probably,  for  a  considerable  time,  and  then, 
by  reason  of  some  circumstance  or  other,  a  great  loss  arises  to  the  com- 
pany, not  on  transactions  commenced  within  a  recent  period,  but  on 
transactions  commenced  long  ago,  it  might  operate  very  injuriously  and 
unjustly  to  say  that,  as  between  the  partners  themselves,  the  partnership 
should  not  be  so  wound  up  as  to  ascertain  what  was  the  state  of  loss  and 
profit,  except  for  the  period  of  three  years  from  the  retirement  of  each 
member,  and  that  those  who  had  gone  out  should  not,  after  that  time, 
be  liable  to  their  partners,  because  they  had  got  rid  of  their  liability  to 

(/•)  See  per  Ld.  Cottenkam,  C,  in  Ex  parte  Earl  of  Mansfield,  2  Mac.  &  G. 
(g)  7  Geo.  IV.  c.  46,  s.  13  ;  see  Ex  parte  Gouthwaite,  3  Mac.  &  G.  201. 


394         GRANT  ON  THE  LAW  OF  BANKING. 

creditors.  Also,  in  taking  an  account  of  liabilities  as  between  tbe  part- 
ners themselves,  independent!;  of  the  statute,  it  may  be  that  the  partner, 
who  cornea  in  after  the  debt  has  been  contracted,  or  who  has  gone  outbe- 
fore  the  goods  have  been  received,  is  not  liable;  in  all  these  cases,  refer- 
ence must  be  had  to  the  form  of  the  partnership." 

It  was  on  these  grounds  Lord  Truro's  opinion  rested,  that  the  Banking 
Act  had  not  the  effect  of  varying  the  liability  to  contribution  between 
the  partners  themselves. (/i) 

Hence,  notwithstanding  that  statute,  a  party  may  be  called  on  as  a 
contributory,  or  a  deceased  partner's  estate  may  be  made  liable  to  contri- 
bute, although  he  or  it  be  not  called  upon  until  three  years  have  elapsed 
from  the  cessation  of  membership  in  either  case.(/<) 
r*epqi  *Weshail  now  advert  to  various  examples  of  decisions  relative 
L         -I  to  the  subject  of  contributories. 

By  the  deed  of  settlement  of  the  North  of  England  Banking  Com- 
pany, it  was  provided  that,  whenever,  by  any  means  whatsoever,  any 
shares  should  become  actually  forfeited,  or  should  be  duly  and  effectually 
transferred  to  a  new  holder,  then,  and  in  such  case,  and  not  before,  the 
responsibility  of  the  previous  holder,  as  a  member  of  the  company,  in 
respect  of  such  shares,  should,  so  far  as  the  law  would  in  that  behalf 
allow,  cease  and  determine,  &c,  &c. 

On  the  2nd  January,  1847,  A.,  being  a  member  and  owner  of  eighteen 
shares,  effectually  transfers  them  to  B.,  and  thenceforth  A.'s  name  is  not 
returned  to  the  stamp  office  as  a  member.  On  the  Gth  March,  the  com- 
pany eeased  to  carry  on  the  business  of  banking,  or  any  further  business 
than  was  necessary  for  the  dissolution  of  the  company  and  the  winding 
up  of  its  affairs.  (7)  On  the  17th  November,  1848,  the  Court  of  Chan- 
cery ordered  "  that  the  company  be  absolutely  dissolved,  and  as  from 
that  day,  and  be  absolutely  wound  up"  under  "  The  "Winding-up  Act, 
1848." 

It  was  held,  by  the  Lord  Chancellor,  on  appeal,  that  A.  might  be 
liable  (whether  or  not  in  equal  degree  with  the  existing  shareholders  at 
the  time  of  the  stoppage  is  a  matter  for  subsequent  inquiry — a  matter  of 
fact)  to  the  debts  of  the  company,  and,  therefore,  was  properly  placed  on 
the  list  of  contributories. (k\ 

By  the  same  deed  of  settlement  personal  representatives  of  deceased 
shareholders  might  become  shareholders,  on  giving  certain  notices.  A 
shareholder  dies,  making  T.  his  executrix.  T.  never  gave  the  prescribed 
notices,  nor  ever  received  any  dividends  in  respect  of  testator's  shares, 
r^cpi-i  but  always  repudiated  the  profits,  liabilities,  and  engagements, 
«-  '  -I  *of  the  company.  It  further  appeared,  from  T.'s  affidavit,  that 
the  testator's  personal  estate  did  not  amount  to  20/.,  and  had  been 
altogether  exhausted  in  the  payment  of  his  debts;  nevertheless,  on 
winding  up  the  company,  T.'s  name,  at  executrix,  was  held  to  have  been 
properly  placed  on  the  list  of  contributories.  (/) 

(/i)  Ex  parte  Gouthwaite,  3  Mac.  &  G.  201-203. 

Q    fcS.  545,  546. 
(*)  In  re  North  of  England  Banking  Company,  (Hawthorne's  case,)  1  Mac.  &G. 
Percentage,  20  L.  J.,  Chanc.  462.  (I)  Thomas's  case,  1  De  G.  &  S.  679. 


COPARTNERSHIPS.    ETC.  -J95 

The  same  was  held  to  be  the  case  where  a  shareholder  had  taken  all 
the  proper  steps  to  assign,  in  conformity  with  the  deed  of  settlement,  to 
the  directors,  for  more  than  two  months,  and  until  the  hank  stopped, 
but  the  directors  omitted,  during  all  that  time,  to  assent  to,  or  dissent 
from,  the  proposal. (m) 

B.  was  one  of  the  projectors  of  a  bank,  and  concurred  in  issuing  a 
prospectus,  containing  regulations,  one  of  which  was,  that  a  deed  of 
settlement  should  be  prepared.  Several  meetings  of  the  proposed 
directors,  at  which  B.  took  the  chair,  occurred,  and  the  teimis  of  the 
deed  of  settlement  were  discussed,  but,  before  it  was  executed  by  any 
one,  B.  retired,  and  ceased  to  be  a  member  of  the  body.  The  deed  was 
afterwards  executed,  at  various  times,  by  other  members,  and  contained 
a  clause,  whereby  the  parties  ratified  all  acts,  contracts,  deeds,  matters 
and  things,  up  to  the  time  of  its  execution,  done,  executed  and  performed 
by  the  directors.  After  the  execution  of  the  deed,  the  dissolution  of 
partnership,  between  B.  and  the  company,  was  advertized.  Several 
years  afterwards  the  company  was  wound  up,  when  it  was  decided  that 
B.  was  not  properly  included  in  the  list  of  contributories.(w) 

It  is  not  to  be  overlooked,  however,  that  a  man  may  be  liable  to  the 
creditors  of  the  company,  who  is  not  liable  inter  socios  ;(o)  it  seems 
that  the  former  is  not,  of  itself,  sufficient  to  make  a  person  a  contribu- 
tory under  the  Winding-up  Act,  *1848,(p)  but,  if  not  liable  as  pggg-i 
a  member,  it  must  be  shown,  in  order  to  make  him  a  "  contri-  L  '  J 
butory,"  that  the  party  is  otherwise  liable  to  the  losses  and  demands  of 

the  company.^) 

The  term  "contributory"  is  thus  defined  by  that  act: — "The  word 
< contributory'  shall  include  every  member  of  a  company ;  and  also  every 
other  person  liable  to  contribute  to  the  payment  of  any  of  the  debts, 
liabilities,  or  losses  thereof,  whether  as  heir,  devisee,  executor,  or  admi- 
nistrator, of  a  deceased  member,  or  as  a  former  member  of  the  same,  or 
as  heir,  devisee,  executor,  or  administrator,  of  a  former  member  of  the 
same,  deceased,  or  otherwise,  howsoever." (r) 

Now,  in  deciding  whether  a  party  is,  or  is  not,  a  "contributory,"  the 
point  to  be  ascertained  is,  whether  he  is  liable,  in  any  manner  what- 
soever, to  contribute  to  the  debts,  liabilities,  and  losses,  of  the  company, 
and  it  is  not  necessary  that  he  should  be  a  member  of  the  company 
according  to  the  strict  provisions  of  the  deed  of  settlement. (s) 

By  the  same  deed  of  settlement  certain  formalities  were  prescribed,  by 
which,  on  a  transfer  of  shares,  the  transferee  was  to  become  a  member 
of  the  company ;  A.  became  the  owner  of  shares,  by  transfer,  and  treated 
himself,  and  was  treated  by  the  directors,  as  a  shareholder ;  all  the  forma- 
lities of  the  deed  were  not,  however,  observed  in  the  transaction ;  A. 
having  died,  his  executors,  every  matter  of  substance  having  been  com- 

(m)  Chartres's  case,  1  De  G.  &  S.  581.         (n)  Busk's  case,  3  De  G.  &  S.  267. 

(o)  Fenwick's  case,  1  De  G.  &  S.  560. 

(p)  Angas's  case,  1  De  G.  &  S.  560 ;  Straffon's  case,  1  De  G.,  M.  &  G.  587,  588. 

(q)  See  1  De  G.,  M.  &  G.  589. 

(r)   11  &  12  Vict.  c.  45,  s.  3. 

(s)  Straffon's  Executor's  case,  cor.  Ld.  St.  Leonards,  C,  1  De  G.,  M.  &  G.  576. 


306         GRANT  ON  THE  LAW  OF  BANKING. 

plied  with,  were  held  to  be  properly  liable,  as  contributories,  in  respect 
of  mi -h  shares,  on  the  winding  np  of  the  affaire  of  the  company. (/) 

It  is  manifest,  therefore,  and  most  deserving  of  attention,  that,  in 
r*"m  order  to  make  a  person  liable  as  a  contributory,  he  *need  not  be 
L  J  a  strictly  legal  member  of  the  company,  according  to  the  strict 
legal  construction  of  the  deed  of  settlement.^) 

Thus,  where  shares  were  purchased  for  an  infant,  without  disclosing 
his  infancy,  the  vendor  signing  a  certificate,  required  by  the  company's 
ruhs,  that  the  purchaser  was  of  age  ;  it  was  discovered  that  the  boy  was 
under  age  ;  the  father  entered  into  a  deed,  with  the  company,  covenant- 
ing to  indemnify  them  from  all  losses  which  might  be  sustained  by  reason 
of  his  son  having  become  a  member  during  his  infancy;  the  father  was 
held  liable  as  a  contributory,  though  he  was  in  no  sense  a  member  of  the 
company,  (u\ 

The  term  "contributory"  has  been  explained  by  the  House  of  Lords, 
in  accordance  with  the  opinion  of  the  learned  judges,  who  were  sum- 
moned to  assist  them,  to  be  this  : — "  Contributories  are  those  only  who 
have  contracted  by  themselves  or  agents  with  a  creditor,  or  who  have 
agreed  to  indemnify,  or  repay  in  part,  or  in  all,  those  who  have  contracted 
with  the  creditor,  on  their  own  account.'Ya:)# 

This  seems  to  be  agreeable  to  what  was  said  by  Lord  Cottenham, 
to  be  the  duty  of  the  court  in  deciding,  whether  a  person  was  liable,  as 
a  contributory.  "  What  I  have  to  do  is,  in  effect,  to  decide,  whether 
there  is  anything  to  make  him  legally  liable  to  the  creditors  of  the  con- 
cern ;"(.>/)  and,  therefore,  it  seems,  that  the  principle  laid  down,  in 
various  cases,  by  another  learned  judge  in  equity, (2)  "  That  the  liability 
of  a  contributory  is  not  the  same  thing  as  the  liability  to  creditors/' 
must  be  considered  as  being  overruled,  unless  it  can  be  understood,  as 
meaning,  that  the  two  liabilities  are  not  precisely  the  same,  in  duration, 
inasmuch,  as  a  former  member  cannot  be  liable  to  a  creditor  of  the  com- 
r-x-rp— 1  pany,  for  *more  than  three  years,  after  he  has  ceased  to  be  a 
L  'J  member,  whereas,  he  may  be  liable,  to  some  extent  or  other,  to 
be  determined  by  reference  to  the  facts  in  each  case,  to  contribute  his 
aid  to  enable  the  members  of  the  company,  at  its  winding  up,  to  provide 
for  the  losses,  &c.  beyond  that  period. 

In  a  banking  company,  A.  was  holder  of  eighty  shares,  at  his  death, 
in  L842j  A.'s  executrix  produced  the  probate  of  his  will;  and  for  more 
than  three  year-  received  the  dividends,  giving  receipts  for  the  same,  as 
executrix,  except  the  first,  which  was  signed  in  her  own  name,  without 
addition. 

By  the  deed  of  settlement,^/)  it  was  provided,  that  until  certain  acts 

(I)  In  re  North  of  England  Banking  Company,  (Straffon's  Executors'  case,)  1 
De  <;..  M.  &  <:.  576,  587. 
(•/)  Reaveley'e  case,  1  De  G.  &  S.  550,  affirmed  jut  Ld.  Chancellor. 
(x)  Bright  v.  Button,  '■'>  II.  Lds.  .'i-il ,  following  Ld.  <  Iranworth,  V.  C.,  in  Carrick's 

Sim.  v.  8.  509. 
(;/)   K.v  parte  Hall,  1  Mac.  &  G.  315;  see  11  k  12  Vict.  c.  45,  s.  3. 
(z)  Bee  Sanderson '.-  .;,-,-.  :;  i>,  ,,'s  case,  3  De  G.  &  S.  90. 

clauses  set  out,  In  re  North  of  England  Banking  Company,  3  Mac.  &  G. 


COPARTNERSHIPS,    ETC.  307 

were  done,  constituting  the  executor  of  a  deceased  member,  or  the  pur- 
chaser of  such  member's  shares,  a  partner  in  the  company,  the  estate  of 
the  deceased  member  should  remain  liable. 

The  company  returned  the  shares  in  the  register  list,  as  shares  held  by 
A.'s  executrix.  There  was  nothing  further  to  show  she  had  constituted 
herself  a  member.  The  ground  on  which  it  was  sought  here  to  make  the 
executrix  liable,  as  contributory,  was  furnished  by  the  provisions  of  the 
deed,  one  of  which  made  each  shareholder  liable,  to  the  losses  of  the 
company,  in  proportion  to  his  shares ;  the  other  amounted  to  a  covenant, 
(it  was  contended,)  by  the  shareholder  executing  the  deed,  that  his  exe- 
cutor should  remain  liable,  while  the  shares  continued  part  of  his  estate, 
and  Lord  Truro  held,  accordingly,  that  the  executrix  was  liable,  though 
by  reason  of  her  not  having  observed  the  requirements  of  the  deed,  she 
was  liable,  not  as  a  member,  but  in  her  representative  character. (&) 

A  widow,  who  was  entitled,  as  executrix  and  residuary  legatee  of  her 
deceased  husband,  to  shares  in  a  banking  company,  executed  a  deed, 
which  professed  to  assign,  but  she  *did  not  actually  transfer  them,  ^-  „„ 
to  a  trustee,  previously  to  her  marrying  again.  The  trustee  L  '  J 
omitted  to  comply  with  the  deed  of  settlement,  in  respect  of  the  forms, 
&c,  to  be  observed  by  an  assignee  of  shares,  but  he  received  the  divi- 
dends, sometimes  signing  the  receipts  "for  the  executors,"  sometimes, 
"by  procuration"  of  the  testator;  once,  "trustee"  of  the  widow, (c)  by 
her  widow's  name,  by  which  she  continued  to  be  called,  in  the  company's 
books,  (where  the  shares  stood  in  her  name,  as  widow,)  and  in  the  regis- 
try and  returns. 

This  was  held,  in  one  Court  of  Equity,  to  be  one  of  the  cases  in  which 
the  formalities  required  by  the  deed  of  settlement  had  been  waived  on 
both  sides,  and  the  trustee  was  considered  to  be  liable  to  have  his  name 
placed  on  the  list  of  contributories,  the  liability  not  to  go  further  back 
than  the  date  of  the  deed  of  assignment. (t?) 

Lord  Cottenham,  however,  reversed  this  decision,  on  appeal,  refusing 
to  hold  the  trustee  liable,  as  a  contributory,  without  more  evidence  than 
the  above  facts,  to  show  that  he  had  in  any  way  connected  himself  with 
the  company,  (e) 

In  the  same  company,  B.,  in  December,  1843,  purchased  twenty  shares, 
the  vendor  and  he  executing  the  usual  deed  of  transfer,  by  which  B. 
covenanted  with  two  of  the  directors  of  the  company,  to  pay  all  sums 
then  due,  or  thereafter  to  become  due,  on  the  shares,  and  otherwise  to 
perform  the  covenants  and  conditions  of  the  deed  of  settlement ;  B.'s 
name  was  thereupon  entered  in  the  company's  share  register  book,  as 
owner  of  twenty  shares.  In  the  same  month,  B.  purchased  thirty  other 
shares  of  the  executors  of  a  deceased  member ;  no  deed  of  transfer  was 

(b)  3  Mac.  &  G.  199,  Gouthwaite's  case  :  see  Ex  parte  Blakeley's  Executors,  id. 
727. 

(c)  See  1  Mac.  &  G.  316. 

((/')  In  re  North  of  England  Banking  Company,  (Hall's  case,)  3  De  G.  &  S.  84. 

(e)  Ex  parte  Hall,  1  Mac.  &  G.  307.  Leave  was  given  to  take  proceedings  at 
law  to  ascertain  Hall's  liability  to  the  debts  and  obligations  of  the  company,  but 
nothing  appears  to  have  been  done  in  it. 


GRANT  ON  THE  LAW  OF  BANKING. 

executed  for  these  shares;  but  according  to  the  practice,  fas  stated  in  the 
former  cases, (/))  they  were  at  once  transferred  into  B.'s  name,  and  to 
r*"roi  *his  account  in  the  Bhare  register  book.  12th  January,  1844, 
L  J  H.  wrote  to  the  manager,  and  inquired  ;ts  to  the  circumstances  of 
the  company.  In  reply,  the  manager  communicated  certain  particulars, 
and.  inter  alia,  stated,  "the  dividends  are  now  payable,  half-yearly,  and 
yon  will  be  entitled  to  one  for  the  last  half-year,  which  will  probably  be 
paid  in  March. "(.'/) 

B.  subsequently  purchased  fifty  other  shares.  These  shares  he,  in 
tact,  but  without  his  knowledge,  purchased  from  the  directors,  being 
forfeited  shares.  No  deed  of  transfer  was  executed  in  respect  of  them  ; 
and,  according  to  the  practice  of  the  company,  they  were  at  once  trans- 
ferred into  B.'s  name,  and  to  his  account ;  and  the  manager  sent  him  a 
certificate,  that  he  was  owner  of  100  shares. 

Upon  these  100  shares  B.  continued  to  receive  dividends,  until  March, 
1S47,  when  the  company  stopped  payment. (//) 

All  the  capital  of  the  company  appeared  to  have  been  lost  long  prior 
to  1843.  In  January,  1844,  the  liabilities  appeared  to  have  exceeded 
the  assets,  by  a  very  large  sum  :  also  the  whole  or  greater  part  of  the 
losses  of  the  company  had  been  incurred  prior  to  B.'s  becoming  a  pro- 
prietor in  it. 

The  deed  of  settlement  gave  power  to  the  directors  to  sell  shares ;(//) 
it  only  prescribed  that  a  transferee  should  execute  a  deed,  if  required  by 
//,,  directors,  and  it  appeared  that  these  directors  never  so  required  B. 
to  execute. 

As  to  the  twenty  shares,  all  the  formalities  were  observed;  about  them 
there  was,  therefore,  no  question. 

As  to  the  fifty  shares  purchased  from  the  directors,  B.  was  held  to 
have  taken  the  company,  at  that  time,  for  better  or  worse,  and  put  him- 
self in  the  same  position  as  any  other  shareholder;  and  it  was  said  to  be 
impossible  to  suppose  that  every  different  purchaser  of  shares  from  the 
pitcw/yi  directors,  *enters  into  a  separate  and  distinct  contract  with  the 
L  '  J  directors,  having  regard  to  the  liabilities,  and  the  state  of  the 
concern  at  the  time. 

As  to  the  thirty  shares,  the  formality  of  a  deed  of  transfer  had  been 
waived,  in  like  cases,  both  by  vendors  and  the  directors:  and  tin'  court 
thought  they  were  all  competent  to  waive  that, (A)  and  did  not  consider 
the  circumstance,  that  there  was  no  deed  of  transfer,  competent — when 
there  Was  no  doubt  of  the  nature  of  the  contract — to  \arv  the  liability  of 
the  purchaser  to  the  company,  or  the  relation  in  which  he  stood  to  the 
vendors. 

These  shares  were  considered  to  have  been  "effectually  transferred," 
within  the  meaning  of  the  phrase,  as  used  in  the  deed  of  settlement,  for 
every  purpose. 

It  is  to  he  observed,  tliat.  notwithstanding  anything  in  a  deed  of  Set- 

(/)  Supra,  pp.  541,  546. 

Cj)  in  re  North  of  England  Banking  Company,  (Bernard's  case,)  5  De  G.  k  S. 

(Ii)  5  De  G.  k  S.  287,  288. 


C  0  PVA  R  T  N  E  R  S II I  P  S,    ETC.  399 

tlenient,  the  liability  of  tlie  transferor  of  shares  remains,  and  must  remain 
at  law  in  favour  of  creditors  of  the  company,  just  where  it  was  before 
the  transfer ;  that  is,  whatever  liability  had  attached  during  his  owner- 
ship of  the  shares  continues  after  the  transfer.(t) 

In  the  same  company,  A.  buys  through  a  broker  one  hundred  shares 
in  one  parcel,  and  pays  the  purchase-money,  300/.,  to  him;  the  shares 
belonged  to  B.  and  C,  each  owning  fifty  of  them.  A.  was  accepted  as 
transferee  by  the  directors,  and  his  nanie  duly  entered  in  the  company's 
books,  as  proprietor  of  one  hundred  shares  :  and  he  received  certificates 
to  the  same  effect ;  B.,  by  deed,  dated  19th  December,  1846,  duly  trans- 
ferred to  A.  five  shares  ;  no  transfer  of  the  other  ninety-five  shares  was 
ever  executed ;  the  company  stopped  payment  6th  March,  1847,  before 
A.  had  executed  the  deed  of  settlement,  and  before  he  had  received  any 
dividend.  Then  the  directors  made  a  call  of  hi.  a  share,  upon  which  A. 
pays  500/. ;  30th  November,  1848,  the  master  charged  *with  the  .-^r,--,-, 
winding  up  of  the  company,  made  a  call  of  30/.  a  share,  under  >-  J 
which  A.  paid  a  further  sum  of  2,500/.,  in  respect  of  his  shares,  being- 
allowed,  as  part  thereof,  the  former  sum  of  500/.  paid  to  the  directors' 
call ;  30th  June,  1849,  A.  received  notice  of  a  further  call  by  the  master, 
of  20/.  per  share. 

It  must  be  observed,  that,  in  the  deed  of  transfer  of  the  five  shares, 
A.  had  covenanted  with  the  vendor,  and  also  with  the  public  officer  of 
the  company,  to  pay  all  instalments  and  sums  of  money  then  due,  or 
thereafter  to  become  due,  in  respect  of  the  five  shares. 

This  covenant,  it  was  held,  must  govern  the  whole ;  the  one  hundred 
shares  forming  the  subject  of  a  single  contract.  Then  the  covenant 
operated  to  throw  the  entire  liability,  both  past  and  present,  from  the 
vendor  upon  the  purchaser,  and  the  purchaser,  therefore,  was  liable,  as 
a  contributory,  for  the  one  hundred  shares,  to  the  full  extent  of  the 
covenant.^-) 

A  person  who  has  entered  into  a  contract  for  the  purchase  of  shares 
from  a  company,  which  has  been  approved  by  the  company,  and  of 
which  a  specific  performance  could  have  been  enforced  against  him,  will 
be  liable,  as  a  contributory,  although  no  complete  or  formal  transfer  of 
the  shares,  according  to  the  deed  of  settlement,  have  been  made  before 
the  company  stopped  payment.  The  price  of  the  shares,  it  is  to  be 
observed,  had  been  paid  to  the  company  28th  January,  1847 ;  the  com- 
pany stopped  8th  March,  1847. 

The  time  when,  for  the  purpose  of  being  placed  on  the  list  of  contri- 
butories,  in  cases  of  winding  up  the  affairs  of  the  company  under  the 
Winding-up  Acts,  a  person  becomes  a  member,  is  the  time  when  he 
entered  on  a  binding  contract  to  take  shares.  (Z) 

(i)  Bernard's  case,  5  De  G.  &  S.  289. 

(k)  In  re  North  of  England  Banking  Company,  (Dodgson's  case,)  3  De  G.  &  S. 
85. 

(?)  In  re  North  of  England  Banking  Company,  (Sanderson's  case,)  3  De  G.  &  S. 
66  ;  see  Dodgson's  case,  3  De  G.  &  S.  90,  remarks  on  this  case.  Name  of  husband 
to  be  on  list  of  contributories,  he  having  received  dividends  on  her  shares,  signing 
the  warrants  per  proc.  of  his  wife,  Burlinson's  case,  id.  18;  see  Dodgson's  case, 
id.  90. 

March,  1857.— 27 


1  ii         GRANT  ON  THE  LAW  OF  BANKING. 

r*--o-i  *The  statute  of  7  Geo.  IV.  o.  46,  as  has  been  observ. id,  does 
L  J  not  directly  affect  the  question  which  arises  in  Buoh  a  case;  that 
statute  deals  with  the  liability  to  creditors,  and  sect.  13,  makes  the 
existing  shareholders  primarily  liable  ;  but  inasmuch  as  the  question 
which  arises  in  such  a  case  realty  is  only  what  is  the  liability  between 
the  member-  themselves,  the  statute  of  itself  has  mi  bearing  cm  the  ques- 
tion, whether  a  person  is  liable  to  be  contributory  in  respect  of  liabilities 
incurred  before  he  became  a  member. (/) 

The  same  deed  of  settlement  forbid  any  share  being  transferred,  on 
which  a  call  was  due  and  unpaid,  and  declared  void  all  transfers  made 
contrary  to  the  deed.  A  legatee  of  shares,  on  which  a  call  was  due, 
took  a  transfer  of  them  from  the  executors  by  a  deed,  to  which  an  officer 
of  the  company  was  party  :  the  legatee  applied  for  the  dividends,  but 
was  refused,  until  the  call  was  paid  up;  this  was  never  done;  the  legatee 
afterwards  married,  neither  she  nor  her  husband,  either  paying  or  receiv- 
ing anything  in  respect  of  the  shares.  Nine  years  afterwards  tin-  husband 
was  held  liable  as  a  contributory,  and  it  was  referred  to  the  master  to 
find  whether  the  wife's  name  also  should  not  be  placed  on  the  list.(«i) 

The  same  deed  of  settlement  provided,  that  the  half-yearly  balance 
sheets  of  the  company's  accounts  should,  as  between  the  shareholders, 
be  binding  and  conclusive,  unless  some  error  shall  be  discovered  therein; 
it  also  declared,  that  a  transfer  of  shares  should  not  release  the  transferor 
from  liability  in  respect  of  his  proportion  of  antecedent  losses.  A. 
transfers  shares;  neither  in  the  preceding  nor  following  half-yearly 
balance  sheet  is  there  shown  any  loss  to  have  been  sustained  by  the  com- 
pany. The  deed  provided,  that  the  directors  at  every  half-yearly  general 
meeting  of  the  company  should  exhibit  to  the  shareholders  a  balance 
sheet,  &c,  and  "such  a  statement  of  the  probable  amount  of  losses  to 
r*~-o-i  be  apprehended  from  the  subsisting  accounts  and  ^engagements 
L  J  of,  or  with  the  company,  and  generally  of  the  state  and  progress 
of  affairs  up  to  the  30th  June  and  31st  December  preceding,  as  the 
directors  shall  deem  expedient,  for  the  interests  of  the  company,  to  be 
made  public."  The  cashier,  who  prepared  the  two  balance  Bheets 
referred  to,  proved  that  the  bank  had  sustained  enormous  losses  at  the 
time  they  were  prepared,  and  that  the  representations  upon  them  were 
in  substance  incorrect. 

It  was  held,  in  equity,  to  be  impossible  to  consider  A.  to  be  liable  as 
a  contributory,  upon  the  winding  up  of  the  company's  affairs,  without 
contradicting  the  clause  in  the  deed,  making  the  balance  sheets  conclusive 
on  the  shareholders. (h) 

By  the  same  deed  of  settlement,  it  was  provided  :  "  In  case  any  per- 
son, in  whom  any  shares  shall,  by  original  subscription,  purchase,  niar- 
ri.eje,  bequest,  representation,  or  other  mode  ot  acquisition,  become 
vested,  and  who  shall  not  have  executed  the  deed  of  settlement,  shall, 
for  six  calendar  month-  alter  notice  in  writing,  for  that  purpose,  neglect , 

(I)  See  note  (I),  preceding  page. 
(m)  Sadler's  case,  3  De  G.  >v  S.  36. 

(n)  In  re  North  of  England  Banking  Company,  (Holmes's  case,)  4  De  G.  &  S. 
312.     Ne  exeat  Regno  against  contributory,  (Mawer'a  case,)  id.  349. 


COPARTNERSHIPS,    ETC.  401 

or  refuse  to  execute  the  same,  it  shall  be  lawful  for  the  directors  to 
declare  the  shares  so  vested  in  such  person,  so  neglecting,  or  refusing, 
and  all  benefit  and  advantage  whatsoever  incident  thereto,  to  be  forfeited 
to  the  other  shareholders,  and  the  same  shall  be  forfeited  accordingly." 

It  had  not,  however,  been  the  practice  of  the  company,  or  directors, 
to  enforce  the  rules,  requiring  notice  to  be  given  by  executors,  of  their 
intention  to  become  shareholders,  the  usual  course  having  been  for  the 
company  to  be  satisfied  with  the  production,  and  registration,  in  their 
books,  of  the  probate  of  the  will  of  the  deceased  shareholder,  or  letters 
of  administration  of  his  estate,  together  with  such  evidence  as  might  be 
sufficient  to  satisfy  the  company  of  the  identity  of  the  person  filling  the 
office  of  executor,  or  administrator,  and  thereupon  to  pay  the  dividend 
to  him. 

*In  a  case  where  William  Glaholme,  a  shareholder,  died,  intes-  r^c-r^-i 
tate,  and  his  brother  was  allowed  to  receive  the  dividends,  without  L  J 
administering  to  his  estate,  on  his  signing  receipts  thus  : — "  Thomas 
Glaholme,  representative  of  William  Glaholme,  deceased,"  but  he  never 
took  out  letters  of  administration,  the  shares  were  never  transferred  into 
his  name,  nor  was  his  name  ever  returned  to  the  Stamp  Office,  as  a 
member;  he  was  held  not  liable  as  representative,  nor  in  his  own  right, 
to  be  made  a  contributory,  (o) 

Effect  of  Winding-up  Acts. — On  the  winding  up  of  a  trading  com- 
pany, against  whom  a  banking  company  has  a  claim,  it  is  not  imperative 
on  the  Court  of  Chancery,  to  decide  the  legal  question  of  debt,  or  no 
debt,  in  such  case ;  if  the  circumstances  under  which  the  claim  is  made 
are  such,  as  to  involve  points  of  law,  which  the  court  may  conceive  not 
to  be  well  settled,  the  court  has  a  right  to  have  the  assistance  of  a  court 
of  law,  and  may  direct  a  claim,  merely  to  be  admitted  until  the  claimants 
establish  their  demand  at  law,  for  which  purpose  they  will  have  liberty 
given  them,  to  take  such  proceedings  at  law,  as  they  may  be  advised  j(p) 
although  it  was  objected,  that  the  trading  company,  not  being  one  which 
is  authorized  to  be  sued  by  any  officer,  could  not  be  sued  by  the  official 
manager.  (^) 

The  above  is  stated  to  show  that  the  truth  is,  as  it  seems,  the  Wind- 
ing-up Acts  are  intended  for  the  benefit  of  con  tributaries,  and  only 
secondarily  for  the  benefit  of  the  creditors,  whose  cases  are  scarcely 
interfered  with  by  them.  It  is  useful,  that,  in  the  process  of  winding 
up,  the  extent  of  the  claims  may  be  known,  that  something  may  be  had 
to  regulate  the  making  of  calls,  in  order  to  discharge  the  liabilities 
*of  the  company;  but  the  Winding-up  Acts  do  not  intend  other-  pugyg-i 
wise  to  interfere  with  the  creditor,  (r)  Indeed,  the  statute  is  l  J 
cautiously  and  studiously  framed,  so  as  not  to  vary,  or  affect  the  rights 
of  creditors. (s) 

(o)  In  re  North  of  England  Banking  Company,  (Glaholme's  case,)  1  De  G.  &  S. 
583,  affirmed  1  Hall  &  T.  123. 

(p)  In  re  Norwich  Yarn  Company,  (The  East  of  England  Banking  Company's 
case.)  5  De  G.,  M.  &  G.  505. 

(q)  See  11  C.  B.  498 ;  3  De  G.,  M.  &  G.  146 ;  11  &  12  Vict.  c.  45,  ss.  50,  90 

(r)  S.  C,  21  L.  J.,  Chanc.  823,  n.  (»)   H  C.  B.  516. 


402  ANT    ON    THE    LAW    OF    BANKING. 

Liabilities  of  Shareholder*  after  Dissolution. — With  respect  to  the 
liabilities  of  the  partners,  or  shareholders,  after  the  dissolution  of  a  bank- 
ing copartnership,  it  is  necessary  to  enter  more  fully  into  explanation, 

than  has  hitherto  been  done;  the  notices  of  such  questions  having  only 
occurred  incidentally  to  the  discussion  of  other  principal  matters. 

When  a  banking  copartnership  stops  payment,  and  dissolve-  Itself,  the 
question  arises,  what  is  the  course  for  a  customer  to  take  whose  account, 
at  the  time  of  dissolution,  showed  a  balance  in  his  favour,  in  order  to  re- 
cover the  debt  due  by  the  copartnership?  One  answer  is,  he  may  sue, 
and  recover  the  whole  from  any  one  of  the  late  partners,  subject  to  a  plea 
in  abatement. 

The  following  instances  show  the  extreme  difficulty  that  lies  in  the 
way  of  a  late  partner,  in  such  case,  as  regards  making  out  his  defence, 
and  protecting  himself: — 

An  action  is  brought  to  recover  the  balances  due  on  the  deposit 
account  of  the  plaintiff,  with  the  Isle  of  Man  Bank,  of  which  the  defend- 
ant had  been  one  of  the  shareholders.  The  defendant  pleads  that  the 
promise,  &c,  was  made  by  him,  jointly  with  several  other  persons  named 
in  the  plea.  The  plaintiff  denies  that  it  was  made  as  alleged.  On  this 
issue  is  joined ;  and  the  parties  go  to  trial,  where  it  is  proved  that  there 
are  other  persons,  who  were  partners  in  the  bank,  at  the  time  of  the  dis- 
solution, (up  to  which  time  the  plaintiff  had  kept  an  account  with  the 
bank,)  besides  those  named  in  the  plea.  The  plea  was,  therefore,  held 
rxnifri  t0  De  disproved,  and  the  plaintiff  having  proved  a  balance  *of 
L  °'  J  upwards  of  G1GL,  had  a  verdict  for  the  whole  amount,  which  the 
Court  of  Exchequer  afterwards  upheld. (tf) 

Now  it  is  to  be  remarked,  that  the  difficulty  of  obtaining  a  correct 
account  of  the  persons  who  were  partners  at  any  given  time  must  almost 
always  be  great,  in  the  case  of  a  party  not  being  a  director;  for  the  re- 
turn to  the  Inland  Revenue  Office  being  only  periodical,  is  not  good 
proof,  because  numbers  of  persons  may  have  become  partners,  and  the 
reverse,  since  it  was  last  made  up. 

But  this  is  not  all,  for  the  only  direct  evidence  to  identify  the  defen- 
dant as  a  partner,  wag  proof  that  a  person  of  the  same  name  had  sub- 
scribed the  deed  of  settlement  j  this  fact,  taken  in  addition  to  the  plea, 
and  the  course  taken  on  the  proceedings  at  the  trial,  were  held  to  consti- 
tute sufficient  ei  idenee  to  go  to  the  jury,  that  he  was  a  partner. 

In  anotl  'he  same  plaintiff  brought  an  action  againBt  another 

1  partner  in  the  Bame  bank;  a  similar  plea  was  pleaded  with  the 
I  but  the  aceonnfc,  in  this  ease,  was  kept  at  a  branch  bank, 
lished  at  Castletown.  The  deed  of  settlement  provided  for  the  es- 
tablishment of  branches  within  the  Me  of  Man,  if  agreed  to  by  the 
unanimous  rote  of  the  directors,  at  a  meeting  convened  in  a  manner  pre- 
scribed. There  was  do  evidence  that  the  Castletown  branch  had  been 
established  with  the  prescribed  formalitiesj  but  it  was  shown,  that  it  had 
been  carrying  on  busim  Bfl  for  thn  e  years  previous  to  the  cause  of  action 

Oreffin  v.  Calvert,  14  M.  k  W.  LI;  Bolfe,  B.,  dissentients,  Pollock,  C.  B.  and 

Phut.  P.,  deeiding  m  above. 


COPARTNERSHIPS,    ETC.  403 

arising,  during  all  which  time  the  defendant  had  been  a  partner  of  the 
bank,  and  had  received  dividends,  and  had  never  made  any  objection  to 
the  establishment  of  this  branch.  On  the  other  hand,  there  was  no  di- 
rect evidence  that  he  knew  of  the  establishment  of  it,  and  it  seemed  that 
he  resided  at  Huddersfield. 

But  the  court  held,  the  mere  lapse  of  time  to  be  evidence  r^^^-] 
*acainst  the  defendant  either  that  the  Castletown  Branch  was  L  J 
established  in  pursuance  of  the  requirements  of  the  deed  of  settlement, 
or  that,  if  it  was  not,  he  knew  and  assented  to  its  establishment  other- 
wise, so  as  to  be  liable  to  the  plaintiff,  as  a  depositor  in  that  branch, (v/) 
and  the  plaintiff  recovered  in  that  action  also. 

Now,  these  decisions  are  the  more  deserving  of  notice,  because  they 
define  strictly  the  responsibility,  after  dissolution  of  the  company,  which 
falls  upon  the  quondam  members  of  the  company ;  and  because,  on  the 
other  hand,  it  is  observable  what  difficulties,  in  most  cases,  lie  in  the  way 
of  retirement,  or  withdrawal,  of  a  member,  who  becomes  dissatisfied  with 
the  management  or  the  prospects  of  the  business ;  if  the  affairs  of  the 
company  are  in  a  languishing  state,  it  might  be  very  doubtful  whether 
the  sale,  by  a  member  to  the  directors,  of  his  shares,  would  be  held  to 
be  valid,  assuming  he  had  knowledge  of  the  condition  of  the  company's 
affairs  ;  if  he  seeks  to  withdraw  himself,  by  compulsory  means,  it  is  pro- 
bable he  would  find  that  he  can  only  obtain  that  relief  on  the  ground  of 
fraud,  or  misrepresentation  having  induced  him  to  become  a  member, 
and  then  he  must  not  only  sue  the  directors  and  company,  but  make  all 
the  other  shareholders  parties  to  the  record. (x) 

Criminal  Liability. — Among  the  liabilties  of  the  members,  or  share- 
holders, of  these  banking  copartnerships,  is  to  be  mentioned,  the  liability 
to  criminal  proceedings,  at  the  instance  of  the  company,  in  respect  of  the 
partnership  property,  &c. 

Any  member  of  any  banking  copartnership,  of  the  descriptions  now 
under  consideration,  who  shall  steal  or  embezzle  any  money,  goods,  effects 
bills,  notes,  securities  or  other  property,  of  or  belonging  to  any  such  co- 
partnership, or  shall  commit  any  fraud,  forgery,  crime,  or  offence,  pc-To-. 
*against,  or  with  intent  to  injure  or  defraud  any  such  copartner-  «-  J 
ship,  shall  be  liable  to  indictment,  information,  prosecution,  or  other  pro- 
ceedings, in  the  namely)  of  any  of  the  officers,  for  the  time  being,  of  any 
such  copartnership,  in  whose  name  any  action,  or  suit,  might  be  lawfully 
brought  against  any  member,  for  every  such  fraud,  forgery,  crime,  or 
offence,  and  may  thereupon  be  lawfully  convicted,  as  if  any  such  person 
had  not  been,  or  was  not,  a  member  of  such  copartnership.^) 

(m)  Crellin  v.  Brook,  14  M.  &  W.  11. 

(x)  Macbride  v.  Lindsay,  22  L.  J.,  Chanc.  165  ;  Ex  parte  Bennett,  24  L.  J.,  Chanc. 
130. 

(y)  See  2  Russ.  Cri.  &  M.  385.  (2)  3  &  4  Vict.  c.  Ill,  s.  2. 


4(J4  G  R  A  NT    ON    THE    L  A  W    0  F    B  A  R  K  I  N  G . 

[*579]  *CHAPTEB    X  VI. 

JOINT   STOCK    BANKS. 

Sim  i:  5th  September,  lv14,  it  is  not  lawful  for  any  company,  of  more 
than  six  persons,  to  carry  on  business,  as  bankers,  in  England,  under 
any  agreement,  or  covenant,  of  copartnership,  made  on  or  after  Gth  May, 
1844,  unless  by  virtue  of  letters-patent  granted  according  to  the  Joint 
Stock  Hanks  Regulation  Act  of  that  year.fa) 

A  body  of  persons,  wishing  to  become  a  joint  stock  banking  company, 
are  to  petition  the  Queen,  in  council,  according  to  a  prescribed  form  ;(&) 
and.  on  the  report  of  the  board  of  trade,  that  the  statutory  requirements 
have  been  complied  with,  a  charter  will  be  granted;)')  then  a  deed  of 
settlement  is  to  be  executed,  containing  certain  specified  provisions. ('/) 
which,  however,  have  been  materially  altered,  in  one  respect,  by  subse- 
quent legislation,  to  be  mentioned  hereafter,  so  as  to  admit  of  the  re- 
election of  outgoing  directors,  &c.,(c)  and  the  deed  must  be  executed 
by  the  holders  of,  at  least,  one-half  of  the  shares,(ri)  and  the  Queen 
may,  by  the  letters-patent,  incorporate  the  company ;(/)  but  so  that  the 
liability  of  the  shareholders  shall  not  be  limited, (</)  and  actions  may  be 
brought  by,  or  against,  the  company,  or  shareholders,  reciprocally,(A) 
every  judgment,  &c.,  against  the  company,  being  enforceable  against 
nn  the  company,  and,  *under  certain  restrictions,  against  share- 
L  -I  holders  and  former  shareholders, (i\  and  execution  against  the 
company,  proving  ineffectual,  may  be  had  against  any  shareholder,  and, 
if  that  be  unproductive,  then  against  any  person  who  was  a  shareholder 
at  the  time  the  cause  of  action  arose,  with  the  limitation  of  three  years, 
Scc.Jk)  such  shareholder  being  entitled  to  reimbursement  from  the 
effects  of  the  company,  or,  in  default,  to  contributions  from  the  other 
shareholders.  (2) 

Registration  within  7  &  8  Vict.  c.  110. — That  a  bank  consists  of 
more  than  Bis  persons,  and  is  a  banking  company,  carrying  on  business 
within  sixty-five  miles  of  London  ;(»*)  that  the  shares  are  of  a  less 
amount  than  100/.;  and  that  the  company  carry  on  the  business  of 
bankers  otherwise  than  by  letters-patent  granted  according  to  stat.  7  & 
8  Vict.  c.  113,  is  not  a  good  ground  to  allege  why  a  company  is  not 
entitled  to  registration  within  7  .V  8  Vict.  c.  11".  if  the  deed  of  settle- 
ment does  not  disclose  that  the  company  is  to  be  a  banking  company; 
for  a  company,  under  7  A:  S  Vict.  c.  1  10.  s.  L'o,   when   completely  regis- 

:  &  8  Vict.  c.  113,  s.  1.  (h)  Id.,  s.  2. 

I  i«/)   Id.,  s.  4. 

J  &  B  Vict.  c.  113,s.  G. 
(g)   [d.,  B.  7.  (A)  Id.,  s.  8. 

.  ,m  B  Vict.  c.  L13,  s.  9. 

;■!.,  8.  10,  Bee  supra,  pp.  481,  483.  Id.,  bb.  11,  12,  13,  14,  15. 

Reg,    r.   Wbitmemh,    L5  Q.  B.    G00;  see  7  &  8  Vict.  c.  113,  s.  47;   see 
Bradshan  182.    The  new  Joint  Stock  Companies  Regulation 

Act,  L9  ..v  20  Vict.  c.  17,  does  not  apply  to  banking  companies,  tee  a.  2. 


JOINT    STOCK    BANKS.  405 

tered,  arc  only  authorized  to  carry  on  the  trade,  or  business,  which  is 
according  to  the  provisions  of  their  deed,  the  registration  not  legalizing 
the  carrying  on  any  business  not  stated  in  the  deed.(m) 

It  is  still  necessary,  that  a  body  of  persons,  intended  to  form  a  joint 
stock  banking  company,  should  be  provisionally  registered  ;  for  it  was 
clear  that,  previously  to  the  late  act,  all  joint  stock  companies  must  be 
provisionally  registered, (n\  and  that  act  does  not  apply  to  banks. 

*  Offices. — Such  a  bank,  incorporated,  may,  nevertheless,  hold  r^co-i-i 
land  for  the  purpose  of  offices,  &c,  without  being  within  the  L 
Mortmain  Act.(o)  It  is  to  be  observed,  that  the  letters-patent  incorpo- 
rate the  body  for  the  purposes  of  banking,  and  empower  them  to  pur- 
chase and  hold  lands  to  such  value  as  shall  be  expressed  in  the  letters- 
patent  ;  but  these  are  granted  for  a  term  of  years,  not  exceeding  twenty 
years.  (p\ 

Returns. — Within  three  months  after  the  grant  of  the  charter,  and 
before  the  company  shall  begin  business,  a  memorial  is  to  be  made  out,(<^) 
setting  forth  the  title  of  the  company,  the  names  and  places  of  abode  of 
all  the  members,  and  of  every  director  and  manager,  or  other  like  officer, 
and  the  name  or  form  of  every  bank  established  by  the  company,  and 
the  name  of  every  town  or  place,  where  the  business  shall  be  carried  on  : 
this  is  to  be  repeated  every  year  between  28th  February  and  25th  March, 
as  long  as  they  carry  on  business  as  bankers,  to  be  delivered  to  the 
Inland  Revenue  Office,  there  to  be  filed,  and  an  entry  or  register  of  it 
made  in  a  book,  to  be  open  to  search,  for  a  fee  of  one  shilling  •  and  a 
printed  list  of  the  registered  names  and  places  of  abode  is  to  be  made 
out,  from  time  to  time,  and  kept  in  a  conspicuous  place,  in  the  company's 
principal  place  of  business  jM  a  like  memorial  shall  be  made  out,  from 
time  to  time,  as  occasion  shall  require,  and  delivered  to  the  above  board, 
according  to  a  prescribed  form,(s)  containing  the  above  particulars,  of 
every  new  director,  manager,  or  other  like  officer,  and  the  names  of  all 
persons  who  have  become  members,  either  in  addition  to,  or  instead  of, 
any  former  member,  and  the  name  of  every  new  town,  in  which  i-^r  q9-, 
*the  company  carry  on  business,  and  the  names  of  all  who  have  L 
ceased  to  be  members;  and  such  further  account  is  to  be  filed,  &c,  &c, 
as  above  ;(ty  all  these  memorials  to  be  signed  by  the  manager,  or  one  of 
the  directors,  and  verified  by  his  declaration  before  a  magistrate,  &c.,(«) 
and  the  persons  whose  names  appear  in  the  then  last-delivered  memorial 
shall  be,  from  time  to  time,  the  existing  shareholders. (cc) 

The  courts,  it  appears,  will  not  interfere  with  the  company,  in  their 


(m)  See  note  (m),  preceding  page. 

(n)  Abbott  v.  Rogers,  24  L.  J.,  C.  B.  158. 

(o)  Ware  v.  Cumberlege,  24  L.  J.,  Chanc.  631. 

(jo)  7  &  8  Vict.  113,  s.  6.  As  to  lease  of  house  in  London,  and  as  to  titho*. 
rent,  &c,  Vivian  v.  Cochrane,  25  L.  J.,  Chanc.  553. 

(q)  See  7  &  8  Vict.  c.  113,  Sched.  A. 

(r)  See  id.  s.  16.  (*)  See  id.,  Sched.  B. 

(t)   See  7  &  8  Vict.  c.  113,  s.  17. 

(w)  See  id.,  s.  18.  "What  evidence  of  memorials,  id.,  s.  19  ;  Prescott  v.  Bufferv. 
1  C.  B.  41.     Certified  copies,  id.,  s.  20. 

(x)  See  id.,  s.  21. 


406  GRANT    OX    THE    LAW    OF    BAHKING. 

performance  of  the  duty  of  making  these  returns,  as  regards  the  form  in 
which  they  are  made,  so  as  to  proscribe  how  they  are  to  be  made,  or 
in  from  making  in  a  particular  way.  The  following  example  has 
rred : — 

A.,  being  a  shareholder,  in  a  joint  stock  bank,  executed  a  deed  of 
transfer  of  his  shares  to  his  sisfe  r,  and  n  ceived  from  the  company  certi- 
ficates of  the  shares  in  her  Dame.  Previously  to  tin  execution  of  tht 
transfer,  and  in  consequence  of  communications  with  A.,  the  company 
had,  in  their  returns  under  7  &  8  Viet.  c.  113,  omitted  A.'s  name,  and 
returned  that  of  his  sister  as  a  new  member  of  the  company.  The  bank 
Btopped  payment;  and  a  call  was  made  of  5/.  per  share,  which  the  sister 
declared  her  inability  to  pay.  Alter  this  the  company  returned  A.'s 
name  to  the  Inland  Revenue  as  the  shareholder,  and,  subsequently, 
informed  his  sister,  that  the  company  could  not  recognize  the  transfer 
to  her. 

On  these  facts  a  court  of  equity  refused,  in  an  interlocutory  applica- 
tion, to  restrain,  by  injunction,  the  company  from  returning  A.'s  name 
as  a  member;  partly,  because,  assuming  A.  to  be  right,  there  was  no 
ground  to  think  that,  as  between  A.  and  the  company,  any  irremediable 
or  serious  mischief  would  be  done  by  the  performance,  by  the  company, 
of  the  acts  which  it  was  sought  to  restrain  ;  partly,  because,  on  the  same 
r*"ft3H  assumption,  none  of  those  acts,  if  *done,  would  be  conclusively 
L  J  binding,  as  between  A.  and  a  stranger,  and  partly,  because  the 
court  thought  it  not  clear  that  A.  was  right,  and  chiefly,  because  the 
application  in  effect  was,  for  the  court  to  issue  a  direction,  that  a  return 
on  oath  shall  be  made  in  a  particular  form — an  insurmountable  diffi- 
culty.^//) 

Besides  the  above  returns,  which  it  will  be  seen  are  not  enforced  by  a 
penalty,  but  which  the  company  ought  not  to  omit  to  make,  with  all  the 
proper  forms,  inasmuch,  as  for  such  nonfeasance,  the  company  might  be 
indicted  as  fur  a  misdemeanour  : — there  are  those  required  by  Stat.  7  &  8 
Vict.  <•.  32,  s.  -l.(  -)  to  be  made  by  every  banker  in  England  on  the  1st 
January,  or  within  fifteen  days  after,  in  each  year,  under  a  penalty  ef  507. 
These,  also,  these  companies  must  make. 

Change  of  Finn. — The  law,  as  before  stated, («)  on  this  subject,  is 
applicable,  as  regards  firms  of  customers  of  the  bank,  to  joint  stock 
banking  companies,  equally  with  private  banks  and  banking  copartner- 
ships: an  in-tance  of  a  nature  not  unlikely  to  occur  in  practice  may  be 
I  here,  as  a  guide,  in  respect  to  one  of  the  most  material  questions 
that  can  arise  out  of  the  subject ,  of  the  relations  between  a  firm  customer, 
and  a  joint  stock  banking  company,  when  one  of  the  directors  of  the 
company  is  a  partner  in  the  firm. 

A  partnership,  con.-i.-tin-  of  four  persons,  carry  on  bu.-iness  under  the 

firm  of  A.  B.,  &  Co.,  and  open  an  account  with  a  banking  company j 

then,  one  of  the  four  partners   retires  from  the  business,  but  this  is  not 

rtized  in  the  London  Gazette,  nor  is  the  pass-book  altered,  although 

Bullock  v.  Chapman,  2  De  Gh  A  B.  211,  214. 

Bee  the  sect,  supra,  p.  (a)  See  supra,  pp.  304,  305. 


JOINT    STOCK    BANKS.  407 

the  style  of  the  firm  is  altered  on  their  sign-hoard,  cards,  and  invoices, 
and  a  cheque  drawn  in  the  style  of  the  old  firm  was  presented,  and  paid 
by  the  bank,  after  the  change.  B.  *is  also  a  director  of  the  r*5g_n 
bank,  but  without  any  share  in  the  management  of  the  concern,  L  J 
and  not  interfering  with  the  accounts,  though  attending  the  weekly 
meetings  of  the  directors ;  he  never  mentioned  the  fact  of  the  change  to 
any  of  them. 

This  circumstance  was  determined  not  to  operate  as  notice  to  the  com- 
pany, of  the  dissolution  of  the  partnership,  so  as  to  exonerate  the  retired 
member  of  the  partnership  from  a  debt  incurred  by  the  partnership  with 
the  company,  subsequently  to  his  retirement; (7/)  because  B.  could  nut 
be  regarded  as  agent  of  the  company,  so  that  notice  to  him  was  notice  to 
the  principal. 

On  the  other  hand,  however,  notice  to  the  head  office  of  a  joint  stock 
bank  will  almost  certainly  be  held  to  be  notice  to  its  branches ;  at  all 
events,  from  the  time  when  the  information  of  the  fact  could  be  trans- 
mitted to  them,(c)  because  that  is  a  case  of  principal  and  agent,  and 
it  is  the  duty  of  the  principal  to  communicate  notices,  &c,  to  the  agent. 

Capital. — The  capital  stock  of  a  joint  stock  banking  company,  under 
this  statute,  is  in  no  case  to  be  less  than  100,000?. ;  the  actual  amount 
which  the  company  propose  to  go  on  with ;  the  means  by  which  it  is  to 
be  raised ;  the  amount  of  it  paid  up  at  the  date  of  the  petition  to  the 
queen,  in  council,  for  the  grant  of  letters-patent ;  where  and  how  such 
paid-up  capital  is,  at  that  date,  invested ;  must  all  be  set  out  in  such 
petition.  ((/) 

It  might  seem  to  be  too  obvious,  to  require  statement,  that  customers 
of  banking,  as  of  all  other  joint  stock  concerns,  are,  in  the  highest 
degree,  interested  to  be  precisely  informed  *of,  and  to  ascertain  p^g^-i 
exactly,  the  amount  of  the  capital  with  which  the  company  is  L 
carrying  on,  or  proposes  to  carry  on,  its  concerns ;  but  the  frequency  of 
misapprehensions  on  this  subject,  and  on  the  resulting  question  of  the 
extent  of  the  liability  of  directors,  shows  that  it  will  be  desirable  to 
call  the  attention  of  all  who  deal  with  banks,  of  this  nature,  very  parti- 
cularly, to  the  importance  of  due  inquiries,  and  full  satisfaction  respect- 
ing it. 

Generally,  the  known  principle  of  equity  is  : — if  a  person,  or  a  body 
of  persons,  induce  another  to  enter  into  a  contract,  on  the  faith  of  repre- 
sentations of  facts,  which  are  incorrect,  that  person,  or  body  of  persons, 
is  bound  to  make  good  those  representations. 

When,  however,  the  directors  of  an  association,  for  the  purpose  of 
banking,  represent  the  capital  of  the  concern  to  be  a  certain  amount — 
say,  100,000/.,  divided  into  so  many  shares,  each  of  such  and  such 
amount,  all  that  they  must  be  understood  to  intend,  according  to  the 
known  usage  in  such  matters,  is  to  state  their  meaning,  (if  they  get  sub- 

(b)  Powles  v.  Page,  3  C.  B.  16,  and  cases  cited  there  ;  the  case  itself  related  to  a 
banking  copartnership  under  7  Geo.  IV.  c.  46,  the  principle  of  it  applies  equally 
to  joint  stock  banking  companies. 

(c)  See  principle  laid  down  in  Willis  v.  Bank  of  England.  4  A.  &  E.  21. 

(d)  1  &  8  Vict.  c.  113,  s.  2. 


408         GRANT  OX  THE  LAW  OF  BANKING. 

scribers  enough,')  to  work  the  undertaking  with  that  capital.  Without 
Bomething  more  than  the  usual  statements  on  such  occasions,  this  does 
not  amount  to  a  representation,  that  the  whole  of  this  capital  has  been 
paid  up,  and  is  in  the  coffers,  or  at  the  command,  of  the  company,  to 
conduct  their  business  with,  so  as  to  enable  the  customers  to  say,  ••  inas- 
much as  you  represented  the  capital  to  be  100,000?.,  you,  the  directors, 
are  liable,  and  each  of  you  is  liable,  to  make  good  to  us  the  whole  amount 
of  that  sum." 

Nor  will  directors  be  held  liable  in  equity,  although  there  may  be  the 
additional  circumstance  of  a  clause  in  the  deed  of  settlement,  providing 
that  each  shareholder  was  only  to  be  liable  to  the  extent  of  his  contribu- 
tion to  the  capital  of  100,000/.,  by  which,  it  might  be  considered,  the 
directors  meant  to  represent,  or  did  represent,  there  to  be  100,000/.,  worth 
of  shares  actually  paid  up.(e) 

r*cQp-i  ^Shares. — In  the  petition  to  the  queen,  in  council,  for  the 
L  J  grant  of  letters-patent,  the  persons  proposing  to  become  a  joint 
stock  banking  company,  under  this  statute,  must  set  out  the  proposed 
number  of  shares  in  the  business;  the  shares  are  not  to  be  less  than  L00?. 
each ;  the  actual  amount  of  each  of  the  shares  into  which  the  proposed 
capital  stock  is  to  be  divided  must  also  be  stated. (/) 

Every  deed  of  partnership  of  a  joint  stock  company,  under  this  statute, 
must  contain  specific  provisions  for  preventing  the  company  from  pur- 
chasing any  shares,  or  making  advances  of  money,  or  securities  for 
money,  to  any  person,  on  the  security  of  a  share,  or  shares,  in  the  part- 
nership business. (<?) 

Buying  up  Shares. — There  have  been  cases  in  which  directors  have 
bought  up  shares,  in  the  company,  with  money  taken  from  the  funds  of 
the  company.  Now,  when  there  is  no  authority  given,  in  the  deed  of 
settlement,  empowering  them  to  do  this,  they  are  held  liable  in  <  quity,(h  | 
to  this  extent  ;  viz.,  they  must  not  only  refund  the  sums  which  they 
have  applied,  out  of  the  company's  funds,  in  these  purchases,  but  they 
must  stand  in  the  shoes  of  the  persons  whose  shares  they  have  so  bought 
up,  and  incur  their  liability  to  the  company,  that  is,  they  must  pay  up 
the  unpaid  residues  of  the  prices  of  the  shares  due  on  the  shares  respce- 
tively,  which  those  persons  would  have  been  liable  to  pay  up,  had  they 
remained  shareholders;  for  the  directors  cannot  he  permitted  to  relieve 
any  one  from  liability,  to  pay  up  the  residue  of  his  contributions  to  the 
capital  which  was  to  be  charged  with  the  debts  due  to  the  customers.(A) 

On  the  whole,  it  appears  settled,  that,  in  ordinary  cases,  and  without 
some  special  authority  in  the  deed  of  settlement,  (if  even  then,)  directors 
r*-87-,  cannot  enable  shareholders  to  withdraw  *from  the  concern;  this 
L         J  is  ultra  vires  of  directors  as  Buch.(t) 

Liability  of  Solicitor. — As  regards  the  above,  and  other  incidents  of 
a  director's  responsibility,  it  is  material  to  observe,  that  it  is  not  only 
persons  who  are  regularly  and  formally  directors  who  may  incur  it;  others 

(e)   Evans  v.  Coventry,  25  L.  J.,  Chanc.  49'J,  500. 

(f\  7  4  8  Vict,  c  113.  s.  2.  (.'/)  Id.,  s  4. 

(/-)  Evans  r.  Coventry,  25  L.  J.,  Chanc.  501  ;  see  supra,  p.  547. 
Ei  parte  Bennett,  24  L.  J.,  Chanc.  130;  see  GMoo.  P.  C.  171. 


JOINT    STOCK    BANKS.  409 

may  so  act  as  to  bring  themselves  within  it ;  thus,  a  solicitor  of  a  com- 
pany, who  is  in  the  habit  of  attending  directorial  meetings,  receiving  the 
allowances,  paid  for  their  attendances,  to  directors,  taking  the  chair, 
which  none  but  directers  were  authorized  to  do,  has  been  held  to  have 
acted  so  as  to  render  himself  responsible  as  a  director,  during  the  time 
of  his  attendances,  (/c) 

Transfer  of  Shares. — Subject  to  the  regulations  of  the  Joint  Stock 
Banks  Regulation  Act,  and  to  the  provisions  of  the  deed  of  settlement, 
every  shareholder  may  sell  and  transfer  his  shares  by  deed  duly  stamped, 
in  which  the  consideration  shall  be  truly  stated,  such  deed  to  be  accord- 
ing to  a  given  forrn,(£)  or  to  the  like  effect;  such  deed,  after  execution, 
to  be  delivered  to  the  secretary  of  the  company,  to  be  kept  by  him,  and 
a  memorial  thereof  entered  by  him  in  the  register  of  transfers ;  then  the 
entry  is  to  be  indorsed  on  the  deed,  at  a  fee  for  every  such  entry  and  in- 
dorsement, of  not  exceeding  2s.  6c?.,  payable  to  the  company. 

Until  such  transfer  have  been  delivered,  as  above,  to  the  secretary, 
the  buyer  is  not  entitled  to  dividends,  or  to  vote,  in  respect  of  such 
share,  (m) 

No  share  can  be  transferred  until  all  calls,  for  the  time  being  due 
on  it,  and  every  other  share  the  owner  of  it  holds,  shall  have  been 
paid.(») 

*The  register  of  transfers  may  be  closed  by  the  directors,  for  p^gg-i 
not  more  than  fourteen  days,  previously  to  each  ordinary  meet-  L  J 
ing ;  they  may  fix  a  day,  for  the  closing,  of  which  seven  days'  notice  is 
to  be  given  in  a  newspaper,  (it  seems  the  London  Gazette  is  intended  ;(o)) 
any  transfer  made  within  such  fourteen  days  shall  be  considered  as  being 
made  subsequently  to  such  ordinary  meeting,  as  between  the  bank  and 
the  transferee. (p) 

When  shares  have  come  to  any  one  by  the  death,  bankruptcy,  or  in- 
solvency of  a  shareholder,  or  by  the  marriage  of  a  female  shareholder,  or 
by  other  legal  means  than  by  the  above  mode  of  transfer,  the  claimant 
shall  not  receive  dividends,  or  vote  in  respect  of  them,  until  his  acquire- 
ment of  them  have  been  authenticated  by  a  declaration  in  writing,  stating 
the  manner,  how,  and  to  whom  they  have  passed,  to  be  made  and  signed 
by  some  credible  person  before  a  magistrate,  &c.(e/) 

This  declaration  is  to  be  left  with  the  secretary,  who  thereupon  must 
enter  the  name  of  the  person  entitled,  on  the  register  book  of  sharehold- 
ers, at  a  fee  of  not  exceeding  2s.  Qd.,  payable  to  the  company,  (r) 

Where  persons  are  jointly  entitled  to  shares,  all  notices  required  to  be 
given  to  shareholders  must  be  given  to  the  person  whose  name  stands 

(k)  25  L.  J.,  Chanc.  501.  (0  See  7  &  8  Vict.  c.  113,  Sched.  C. 

(m)  Id.,  s.  23.  (n)  Id.,  s.  24. 

.o)  In  the  stat.  s.  25,  the  words  used  are,  "notice  shall  be  given  by  advertise- 
ment in  some  newspaper  as  after  mentioned,"  but  the  only  newspaper  mentioned 
subsequently  is  the  London  Gazette,  mentioned  in  S.  38. 

(p)  Id.,  s.  25. 
q)  See  Id.,  s.  26.     The  directors  may  require  such  other  form  as  they  think  fat, 

s.  26. 

(r)  See  Id.     Transmission  of  shares  by  will,  intestacy,  marriage,  id.,  s.  2  i. 


410  .ANT    OH    THE    LAW    OF    BANKING. 

th*>t  in  tl:  ■  c  of  shareholders,  which  is  to  be  notice  to  all  of 

them. (a) 

When  the  shareholder  is  a  minor,  idiot,  or  lunatic,  the  receip*  for  any 
1  money  payable  to  him,  of  the  guardian,  in  *case  of  a  minor,  of 
L      '  J  the  committee,  in  ease  of  an  idiot  or  lunatic,  shall  be  suffi- 
cient.^) 

The  company  are  not  bound  to  regard  trusts  to  which  any  shares  may 
be  Bttbject.(u) 

The  receipt  of  the  person,  in  whose  name  a  share  stands  in  the  books 
of  the  company,  discharges  the  company,  in  respect  of  any  dividend  ur 
other  sum,  payable  in  respect  of  such  share,  notwithstanding  any  trust 
attaching  to  the  share. («) 

The  liability  of  shareholders  is  unlimited  ;(.'•)  they  may  be  sued  by, 
and  may  sue,  the  company/;/)  and  judgment,  decrees,  and  orders,  against 
the  company,  may,  in  certain  circumstances,  be  enforced  against  them 
individually,  whether  they  were  members  at  the  time  the  cause  of  action 
arose,  or  have  been  members  within  three  years. (2) 

Ex,  cutors. — As  to  the  liability  of  executors,  in  respect  of  shares  of  the 
testator,  in  a  joint  stock  banking  company,  it  seems  desirable  to  state 
such  principal  points  as  have  been  decided  by  the  courts. 

Anne  Hall,  being  an  owner  of  thirty  shares,  regularly  entered  in  her 
name  in  the  books  of  the  company ;  by  her  will  gives  them  to  her 
daughter  and  her  Bon,  making  the  son  and  a  Mr.  Crossfield  joint  execu- 
tors; the  latter  never  took  an  active  part  in  the  executorship;  but  he 
proved  the  will,  and  acted  as  executor,  thus  becoming,  in  all  respects, 
liable  as  executor.  An  entry  uf  the  probate  of  the  will  was  duly  entered 
in  the  books  of  the  company,  in  compliance  with  the  above  statute,  giv- 
Lng  the  executors  a  righl  to  deal  with  the  shares,  according  to  the  pro- 
visions  of  the  deed  constituting  the  company;  the  shares  were  entered 
in  the  names  of  R.  Hall,  (the  son  of  testatrix,)  and  J.  Crossfield,  as  exe- 
,  cutors,  &c.  No  communications  ever  took  place  between  *the 
L  '  -I  latter  and  the  bank,  relative  to  the  shares;  Hall  received  the 
dividends,  and  corresponded  with  the  bank  on  the  subject  of  the  shares : 
Hall  sold  some  of  them,  and  received  the  dividends  of  the  remainder. 
Afore  than  nine  years  after  the  death  of  Anne  Hall,  the  company  failed. 
Then  the  question  was,  whether  Crossfield  was  liable  to  the  debts  of 
the  company,  in  respect  of  these  Bhares,  and  it  was  held  by  Lord  St. 
Leonards,  C,  that  he  was. (a)  There  was  in  the  deed  of  settlement,  in 
this  case,  an  independent  covenant — that  is,  a  covenant  by  each  .-hare- 
holder — binding  their  real  and  personal  representatives,  that  they  will 
continue  liable,  in  reaped  of  any  Bhares,  that  form  part  of  their  1 
The  reason  for  the  insertion  ofsuoh  a  clause  is  this — the  executors,  qud 
ators,  not  becoming  members,  and  n<»t  having  sold,  would  not  them- 

(*)  Id.,  s.  28. 

ft  S  Vict  c.  113,  (m)  Id.,  s.  30. 

(z)  Id..  8.  7.  (y)  Id.,  s.  8. 

(z)  Id.,  Be.  9,  i".  Bee  Bupra,  pp.  482,  483. 
(a)  c  kse,  2  De  <;...  M.  &  G.  128. 


JOINT    STOCK    BANKS.  411 

selves  be  responsible  personally,  and  until  they  sold,  and  other  persons 
came  in  their  place,  there  would  be  no  personal  responsibility. 

Generally,  the  rule  is,  that  executors,  holding  shares  merely  as  such, 
and  never  having  taken  them  to  themselves  as  beneficial  holders  of  them. 
are  only  liable  to  the  extent  of  the  assets  of  those  whom  they  represent : 
the  liability  is  that  of  the  estates  of  the  original  holders ;  and  so  is  the 
practice  under  the  Winding-up  Acts,  and  in  a  creditor's  suit,  in  the  case 
of  a  representative  of  a  deceased  executor.  (l>\ 

In  the  case  just  referred  to,(c)  it  was  in  vain  contended  upon  tbe  facts, 
that,  as  by  the  deed  no  executor  is  entitled  to  receive  the  profits  of  the 
share  of  his  testator,  until  he  shall  have  become  a  member,  but  those 
profits  shall  be  kept  in  suspense,  accumulating ;  to  be  a  great  hardship 
on  Mr.  Crossfield,  that  the  money  is  not  now  in  deposit,  as  it  ought  to 
have  been,  because,  if  it  had  been  so,  it  would  have  gone  in  a  great 
measure  to  answer  the  liability  sought  to  be  cast  upon  him  in  the  suit ; 
and  further,  that  this  circumstance  shows  *Hall  to  have  been  r:).,Qn 
accepted  as  a  member,  and  the  company  to  be  bound  by  the  ac-  L  J 
ceptance. 

In  answer  to  this  Lord  St.  Leonards  said,  "I  have  held,  and  am  pre- 
pared to  hold  again,  that  directors  may  do  acts  in  reference  to  the  trans- 
fer of  shares,  binding  upon  the  whole  body,  by  which  they  waive  certain 
formalities  which  they  ought  to  have  observed. "(c) 

In  an  ordinary  trading  partnership  it  is  to  be  remembered,  that,  in  the 
common  law  courts,  every  member  is  liable  to  the  full  extent  of  his  for- 
tune, for  the  debts  of  the  whole  body;  and  no  stipulation  in  the  deed  of 
settlement  can  alter  this  liability, (d\  as  to  the  creditors  of  the  company; 
their  rights  remain  precisely  the  same,  whether  such  a  stipulation  be,  or 
be  not,  inserted  in  the  deed ;  such  a  provision  applies  only  between  the 
shareholders;^)  the  common  law  pays  no  regard  to  the  stipulations,  re- 
stricting liability,  when  the  interests  of  third  persons  intervene. (/) 

Galls. — From  time  to  time  the  directors  may  make  such  calls  on  the 
shareholders,  "in  respect  of  the  amount  of  capital  stock,  respectively 
subscribed  by  them/'  as  the  directors  shall  think  fit.(V/) 

Whenever  execution  upon  any  judgment  against  the  company  shall 
have  been  taken  out  against  any  shareholder,  the  directors,  within 
twenty-one  days  next  after  notice  shall  have  been  served  upon  the  com- 
pany, of  the  payment  of  any  money  by  such  shareholder,  or  by  his  exe- 
cutors, &c,  in  or  toward  satisfaction  of  such  judgment,  shall  make  such 
calls  upon  all  the  shareholders,  as  will  be  sufficient  to  reimburse  such 
shareholder,  &c,  and  every  shareholder  must  *pay  every  call,  to  r^r09-i 
the  persons,  at  the  times  and  places,  from  time  to  time  appointed  <-  '  l  ^J 
by  the  directors.  (A) 

(b)  Evans  v.  Coventry,  25  L.  J.,  Chanc.  499. 

(c)  2  De  G.,  M.  &  G.  127,  128  ;  see  5  H.  Lds.  297,  and  cases  there. 

\d)  This  is  not  peculiar  to  the  common  law  of  England,  see  Fox  v.  Clifton,  6 
Bing.  776. 

(e)  See  Hallett  v.  Dowdall,  18  Q.  B.  2,  50;  Smith  v.  Hull  Glass  Company,  8  C. 
B.  675 ;  S.  C,  11  C.  B.  897  ;  and  see  25  L.  J.,  Chanc.  492. 

(/)  See  Evans  v.  Coventry,  25  L.  J.,  Chanc.  497,  498,  for  observations  as  to 
the  relief  in  equity  in  such  case.  {g)  7  &  8  Vict.  c.  113,  s.  31. 

(A)  7  &  8  Vict.  c.  113,  s.  31.     Interest  at  51.  per  cent,  per  annum  on  calls  un- 


412        GRANT  ON  THE  LAW  OF  BANKING. 

Besides  being  liable  to  pay  mils,  by  way  of  action,  shareholders  ma] 
forfeit  their  Bhares,  by  leaving  calls  unpaid,  if  the  directors,  at  any  time 

after  six  calendar  months  from  the  day  appointed  for  the  payment  »( 
rach  calls,  declare  them  to  be  so  forfeited  ;  the  shareholders  still  remain- 
ing liable  for  the  calls  due  before  the  forfeiture. (/) 

But  in  order  to  authorize  the  sale,  &c,  of  such  shares,  the  declaration 
must  be  confirmed  at  some  general  meeting,  held  at  least  two  calendar 
months  from  the  day  the  notice  of  intention  to  declare  was  given. (/,•) 

And  on  payment  of  the  arrears  of  calls,  due  on  Buch  shares,  &c., 
being  made  before  the  actual  sale  of  them,  they  revert  to  the  original 
owner.(<) 

Directors. — The  deed  of  partnership  of  every  joint  stock  banking  com- 
pany,  under  this  statute,  which  is  to  be  prepared  according  to  a  form,  to 
be  approved  of  by  the  Board  of  Trade,  in  addition  to  any  other  provi- 
sions which  may  be  contained  in  it,  must  contain  specific  provisions  for 
the  management  of  the  affairs  of  the  bank,  and  the  election  and  qualifi- 
cation of  directors. (m) 

As  regards  re-election  of  retiring  directors,  no  deed  of  settlement,  of 
any  company,  established  since  29th  July,  1856,  need  contain  any  pro- 
viso for  preventing  the  re-election  of  retiring  directors,  either  absolutely, 
or  for  any  limited  period  ;  and,  in  every  hanking  company,  being  at  that 
date  ^established  under  7  &  8  Vict.  c.  113,  the  directors  retiring 
L  J  at  any  general  meeting,  henceforth  will  be  eligible  for  re-elec- 
tion, (if  duly  qualified  in  other  respects,)  notwithstanding  the  proviso  of 
the  last-mentioned  statnte,(m)  that  the  deed  of  partnership,  of  every 
banking  company,  to  be  established  under  that  act,  should  contain  a  spe- 
cific proviso,  for  the  retirement  of  at  least  one-fourth  of  the  directors, 
yearly,  and  for  preventing  the  re-election  of  the  retiring  directors,  for 
at  least  twelve  calendar  months  :  this  proviso  having  been  lately  re- 
pealed, (nj 

Any  one  of  the  directors  is  empowered  to  sign  bills  of  exchange,  or 
promissory  notes  made,  accepted,  or  indorsed,  on  behalf  of  the  company, 
provided  it  be  therein  expressed  to  be  so  made,  &c,  by  him  on  behalf  of 
the  company;  and  he  will  not  be  liable  on  such  bill,  &c,  otherwise  than 
he  would  be  on  any  other  contract,  signed  by  him,  on  behalf  of  the  com- 
pany. (</) 

The  powers  and  obligations  of  directors,  as  to  calls,  are  stated  under 
that  head,(jp)  and,  generally,  some  observations,  applicable  here  also, 
will  be  found  above. (7) 

j.  32.  Action  for  calls,  ss.  33,  34;  proof,  s.  35.  Register  book  to  be  proof 
oJ  proprietorship,  s.  36;  Bee  Waterford  Railway  Company  v.  Wolseley,  1  Ir.  L.  B. 
(N.  8.)  444.  ,   .       .. 

(*)  id.  b.  31.  Hotice  of  the  intention  to  declare  muBl  first  be  Berved,  &c,  id.,  s. 
38  :  if  the  address  i-  not  known,  must  be  published  in  London  Gazette,  s.  38. 

(A)  Id.,  s.  39.  Evidence  of  forfeiture,  s.  40.  Title  to  such  sliares,  of  buyers,  s. 
40.     Limit  on  power  to  sell,  B.  41. 

(/)   M ,   Bi  42.  ('")   7  &  8  Vict.  c.  113,  s.  4. 

(n)    19  tl  20  Vin.  c.  100,  ss.  1,  2.  (o)   1  &  8  Vict.  c.  113,  s.  22. 

-.,.,   ,,.  59!.  See  supra,  p.  525. 


JOINT    STOCK    BANKS.  413 

Generally,  what  has  heen  said  of  directors  of  copartnerships  under  7 
Geo.  IV.  c.  46,  holds  with  respect  to  directors  of  joint  stock  banks. 

Service  of  notices,  writs,  or  other  proceedings  at  law,  in  equity,  or 
otherwise,  on  any  director,  for  the  time  being,  by  leaving  the  same  at 
the  principal  office,  or  if  the  company  have  suspended  or  discontinued 
business,  by  serving  personally  such  director,  or  by  leaving  with  some 
inmate,  at  his  usual  or  last  abode,  is  good  service  on  the  company. (/•) 

In  taking  securities,  other  than  actual  deposits  of  negotiable  securities, 
goods,  &c,  as  explained  above, (s)  directors  and  ^managers  have  [-*kcmi 
frequently  to  consider  the  validity  of  the  thing  offered,  by  way  L  »  J 
of  safeguard  from  loss ;  thus,  if  it  be  a  mortgage  of  land,  it  ought  to  be 
satisfactorily  shown,  that  there  is  no  prior  mortgage,  or  if  there  is,  that 
the  amount  of  it  is  such  as  to  admit,  in  addition,  of  the  further  mortgage 
proposed  :  if  the  land  lies  in  a  register  county,  care  ought  to  be  taken  to 
see  that  the  deed  is  duly  registered ;  if  a  bill  of  sale  of  goods  be  taken,  it 
must  be  duly  filed  ;(£)  and  then  considerations  must  be  gone  into,  as  to 
the  circumstances  in  which  the  assignment  is  made,  and  if  by  a  trader, 
whether  it  is  made  in  such  a  posture  of  his  affairs  as  to  amount  to  a  de- 
lay of  creditors, (it)  or  to  a  fraudulent  preference  ;(x\  if  a  bond — as  a  post 
obit  bond — is  offered,  it  may  be,  that  if  it  have  been  given  for  a  gambling 
debt,  or  on  some  other  illegal  consideration,  to  the  knowledge  of  the  bank- 
ing company,  or  their  representative  in  the  transaction,  they  could  not  en- 
force it.(y) 

Dividends. — A  very  commonly  known  temptation  besets  directors  of 
these  and  otber  joint  stock  bodies,  to  declare  and  divide  dividends  to  the 
shareholders  without  due  regard  to  the  actual  state  of  the  company's 
affairs.  The  deed  of  settlement  mostly  provides  against  this,  by  enjoin- 
ing, that  no  dividend  shall  be  made,  except  in  a  prescribed  manner,  and 
under  specified  circumstances.  Then,  what  is  the  liability  of  directors 
who,  in  disregard  of  this  provision,  declare  and  divide  dividends  ?  In 
the  event,  (which,  in  most  cases,  is  almost  certain,)  that  knowledge  of 
the  real  state  of  the  affairs  of  the  company  can  be  brought  home  to  them, 
they  will  be  *made  in  equity  to  refund,  not  only  the  dividends, 
on  their  own  shares,  which  they  distributed  to  themselves,  under  L  -1 
such  declarations,  toties  quoties,  but  they  will  also  be  made  to  refund  all 
the  dividends,  paid  under  such  declarations  of  dividend,  so  far  as  they 
were,  personally,  parties  to  the  declaring  of  dividends,  or  concurred 
in  it. 

It  will  not  suffice  for  th'em  to  prove,  that  they  did  not  act  under  the 
influence  of  the  desire  to  pocket  the  dividends  on  their  own  shares,  but 
with  a  desire  of  representing  the  concern  to  be  in  a  prosperous  condition, 

(r)   7  &  8  Vict.  c.  113,  s.  43.  (s)  See  chapter  VI. 

\t)   17  &  18  Vict.  c.  36. 

(u)  See  Bittleston  v.  Cooke,  25  L.  J.,  Q.  B.  281 ;  Leake  v.  Young,  id.  266  ;  Ex 
parte  Taylor,  5  De  G.,  M.  &  G.  392 ;  Ex  parte  Sparrow,  2  De  G.,  M.  &  G.  27 ;  Ex 
parte  Bland,  cor.  Lds.  Justices,  Nov.  1855.  Mortgage  of  machinery,  Mather  v. 
Fraser,  2  K.  &  J.  536  ;  see  Flory  v.  Denny,  21  L.  J.,  Exch.  223. 

(x)  See  supra,  pp.  85-87,  321. 

\y)  Hawker  v.  Hallewell,  25  L.  J.,  Chanc.  588;  as  to  mortgage  of  reversionary 
interest,  S.  C. 


414         GRANT  ON  THE  LAW  OE  BANKING. 

bo  as  to  attract  an  increase  of  custom,  and  to  raise  the  value  of  the  si 
and  stimulate  the  demand  for  them  in  the  market : — it  will  make  do 
difference,  that  they  insist  ui>  it,  their  real  objeot  was,  the  ultimate 
interests  of  the  Bhareholdera,  and  the  advantage  of  all  parties: — they 
will  be  held  liable  for  the  aggregate  of  the  dividends,  which  have  been 
disbursed  under  declarations  of  dividends,  to  which  they  were  parties, 
or  in  which  they  concurred  ;(z)  for  their  acts  are  to  be  regarded  as 
fraudulent  towards  any  person,  who  may  be  induced  by  this  false  sem- 
blance of  prosperity,  to  place  his  money  with  the  company;  it  is  not 
only  that  such  acts  are  contrary  to  the  regulations  of  the  company,  but 
they  constitute  breaches  of  duty  as  well  to  the  customer  as  the  share- 
holdei 

Manager. — A  manager,  or  other  officer  to  perform  the  duties  of  a 
manager,  must  be  appointed,  in  all  cases  of  joint  stock  banking  companies, 
under  this  statute.(a) 

The  duties  of  the  manager,  who  is  not  personally  liable  on  contracts 
signed,  by  him,  on  behalf  of  the  company,  are  the  following  only,  as 
limited  by  tke  statute. 

Bills  of  exchange,  or  promissory  notes,  made,  accepted  or  indorsed  on 

behalf  of  the  company,  may  be  made,  &c,  in  any  manuer  specified  in 

p    the  deed  of  partnership,  provided  *they  be  signed  by  the  manager 

l  °     J  (or  one  of  the  directors,)  and  be,  by  him,  expressed  to  be  so  made, 

&o.,  by  him,  on  behalf  of  the  company.(A) 

Service  of  notices,  writs,  or  other  proceedings  at  law,  or  in  equity,  or 
otherwise,  on  the  manager,  by  leaving  them  at  the  principal  office  of  the 
company,  or  if  the  company  have  suspended  or  discontinued  business, 
by  -erviug  personally  the  manager,  or  by  leaving  with  some  inmate,  at 
the  usual  or  last  abode  of  the  manager,  is  good  service  on  the  company.(c) 

Meetings. — There  must  be  holden  once,  at  least,  every  year,  at  an 
appointed  time  and  place,  an  ordinary  general  meeting  of  the  company. (c<) 

Extraordinary  general  meetings  must  be  held  upon  the  requisition  of 
nine  shareholders,  or  more,  having,  in  the  whole,  at  least  twenty-one 
shares,  (o7) 

Audit, — The  deed  of  partnership  must  contain  provisions  for  t  lie  yearly 
audit  of  the  accounts  by  two  or  more  auditors  chosen  at  a  general  meeting 
of  the  shareholders,  and  not  being  directors.^/) 

Publication  of  Accounts,  (fee— The  deed  of  partnership  must  contain 
provisions    lor  the  publication,  once,  at  least,   in   every  month,    of  the 
assets  ami  liabilities,  and  for  the  yearly  communication  to  every  share- 
holder of   the    auditor,-'  report,  of  a  balance  sheet,  and   profit   and   loss 
.nnt.('/j 

\futual  Duties  of  Members. — In  general,  asregards  the  mode  in  which 
joint  stock  banks  will  be  (halt  with  by  the  courts,  the  law  is  to  be 
gathered  from  the  principles  laid  down,  by  high  authority,  thus,  in 
speaking  of  joint  stock  companies  generally. 

(2)    I!  . entry.  25  L.  J.,  Chunc.  500,  501  ;  see  supra,  p.  517. 

(a)  7  .v  8  Vict.  c.  113,  s.  4. 

(b)  7  k  8  Vict.  c.  113,  s.  22.  (c)  Id.,  s.  43. 
(J)  Id.,  s.  1. 


JOINT    STOCK    BANKS.  415 

*If  a  deed  of  settlement  contains  provisions,  with  respect  to  r*rn-i 
general  and  extraordinary  meetings,  it  is  especially  necessary  to  L 
hold  its  members,  as  strictly  as  may  be,  to  the  very  letter  of  their  con- 
tracts with  each  other ;  for,  otherwise,  when  it  is  proposed  to  deal  with 
the  affairs  of  the  company,  in  pursuance  of  resolutions  passed  at  such 
general  or  extraordinary  meetings,  many  of  the  partners,  who  may  be 
unable  or  unwilling  to  attend,  may  find  themselves  bound  by  proceedings 
which  have  taken  place  at  such  meetings,  though  directly  opposed  to  the 
terms  on  which  they  have  entered  on  the  partnership. (e\ 

A  resolution,  even  of  a  general  meeting,  involving  a  positive  breach 
of  the  existing  rules  and  regulations  of  the  company,  the  deed  of  settle- 
ment expressly  confining  the  powers  of  general  meetings  to  measures  not 
inconsistent  with  those  rules,  is  clearly  beyond  the  powers  of  a  general 
meeting,  but  it  may,  or  may  not,  be  within  those  of  an  extraordinary 
meeting,  according  to  the  terms  of  the  deed.(e) 

The  majority  of  a  joint  stock  company  have  no  power  to  divert  the 
funds  to  other  and  different  purposes  from  those  contemplated  in  the 
deed  of  settlement  ;(e)  for  though  the  majority  may  bind  the  minority 
upon  every  point  which  the  deed,  by  their  common  contract,  authorizes, 
ye*  they  have  no  authority  whatever  to  bind  the  minority  on  any  matter 
that  is  not  within  the  common  contract.  (/) 

It  is  of  no  avail  to  bind  the  partnership,  that  the  directors  and  others 
present  at  a  meeting,  where  any  course  is  resolved  on  beyond  the  objects 
contemplated  in  the  deed,  bind  themselves  not  to  dispute  what  is  there 
agreed  on ;  that  may  or  may  not  bind  the  individuals ;  it  does  not  bind 
the  company//) 

Partners  may,  no  doubt,  however  numerous,  as  other  *people  ^p.^-. 
may,  depart  from  the  general  contract  between  them,  but  they  L  -I 
cannot  depart  from  it  without  the  consent  of  every  individual  member 
composing  the  partnership.  If  what  they  do  is  not  done  within  the 
limits  of  the  contract  which  they  had  originally  entered  into,  it  is  not 
binding  on  their  co-partners.  Nor  can  it  be  said  that  the  company  are 
precluded — as  was  once  thought  might  be  alleged  with  effect — by  acquies- 
cence in  what  has  been  done ;  because,  properly  speakiug,  the  ground  is 
not  laid  for  that  argument,  unless  it  be  shown  that  all  the  members  were 
present  at  the  meeting  where  the  alteration  was  made,  or  that  all  had 
knowledge,  and  a  perfect  understanding,  of  what  was  done,  and  of  the 
effect  of  it,  and  assented  to  and  acquiesced  in  it.  But,  in  truth,  prac- 
tically, the  application  of  the  doctrine  of  acquiescence  to  such  cases  must 
lead  to  insuperable  difficulties,  because,  in  dealing  with  individual  mem- 
bers, some  who  are  asserting  equities,  which  they  have  precluded  them- 
selves from  maintaining,  may  be  bound  qua  partners  by  particular  acts, 
while  the  general  body  would  not  be  bound.  (#) 

Advances  to  Directors,  &c. — Experience    has   shown  the  besetting 

(e)  See  per  Ld.  St.  Leonards,  C,  in  Lawes's  case,  1  De  G.,M.  &  G.  429-433;  per 
Ld.  Cottenham,  C,  Morgan's  case,  1  Mac.  &  G.  225  ;  per  Ld.  Eldon,  0.,  Const  v. 
Harris,  Turn.  &  R.  496. 

(/)  See  1  Mac.  &  G.  235,  239. 

(g)  See  Morgan's  case,  1  Mac.  &  G.  240;  Lawes's  case,  1  De  G.,  M.  &  G.  433. 

March,  1857.-28 


Hi)  ilRAXI    ON    THE    LAW    OF    BANKING. 

evil  of  joint  stock  banking  oompaniestobe  a  too  great  readiness  to  make 
advances,  and  that,  too,  without  propei  Becnrity,  and  in  many  cases  the 
advances  have  been  made  to  other  joint  stock;  concerns.  Now,  it  is  verj 
material,  in  ease  of  an  application  for  accommodation  of  this  kind,  by 
the  direotors  of  a  joint  stuck  trading  company,  to  the  directors  of  a  bank, 
for  the  latter  to  ascertain  whether  the  former  have  power  to  borrow  given 
them  by  the  deed  of  settlement,  and  next  to  see  whether  theirs  is  one 
of  the  extremely  few  rases  in  which  the  law  implies  an  authority  to  borrow 
money  from  the  nature  of  the  dealings  and  business  of  the  company; 
unless  one  or  other  of  these  is  the  ease,  money  advanced  by  the  bank 
will  not  be  debt  due  to  the  *bank  from  the  trading  company, 
L         J  and  cannot  be  recovered  as  such. (A) 

Contract*. — Directors  of  a  joint  stock  company,  incorporated,  enter 
into  a  contract,  under  the  common  seal  of  the  company,  exceeding  their 
authority  in  so  doing.  This,  of  itself,  does  not,  it  has  been  said,  avoid 
the  contract;  it  must  further  be  shown,  in  order  to  do  this,  that  the 
contracting  parties,  when  they  contracted,  were  aware  of  the  fact,  and 
aware,  also,  that  the  contract  would  be  prejudicial  to  the  interests  of  the 
shareholders ;  and  the  obligees  of  the  bond,  a  banking  company,  recovered 
upon  it.(«) 

This  decision  lays  down  a  principle  which  it  is  important  for  all 
bankers  to  be  aware  of;  it  is  mentioned  here,  because  it  is,  in  cases  of 
joint  stock  banking  companies,  that  transactions  of  this  kind,  viz.,  loans 
or  advances  of  money  to  a  corporation,  upon  its  bond,  experience  shows, 
most  commonly  to  occur. 

On  the  Other  hand,  all  persons  dealing  with  banking  companies  must 
take  notice — they  are  bound  to  be  aware — of  the  limitations  imposed  by 
the  deed  of  settlement,  or  by  any  statute,  upon  the  directors  as  regards 
their  powers;  but  not  bound  to  more  than  to  be  aware  of  these  limita- 
tions ;  they  are  not  bound  to  draw  any  but  direct  or  obvious  inferences 
from  the  provisions  they  find  there. (A-) 

Winding  up  and  Bankruptcy. — The  winding-up  acts  may  be  applied 
to  the  settlement  of  the  affairs  of  joint  stuck  banking  companies  gener- 
ally;^) also  upon  the  company  committing  an  act  of  bankruptcy,  as 
r*rom  defined  '"  "  &  s  ^  u't-  c-  m>  *s-  "*>  or  uPon  a  proceeding  by  a 
L  -I  creditor,  and  an  act  of  bankruptcy,  as  defined  in  s.  7,  a  fiat  in 
bankruptcy  may  issue  against  such  company.  Also,  prosecutions  may 
be  instituted  in  certain  cases,  indicated  in  s.  -~i,  against  directors  or 
other  officers  of  the  company  whose  conduct  may  call  for  it. 

A  petition  for  winding  up  the  affairs  <>\'  one  of  these  bodies  is  not  to 
be  refused  on  the  ground,  merely,  that  there  are  no  debts  due  from  the 

(h)  Ex  parte  Chippendale,  I  De  <'...  M.  &  G.  L9;   Burmester  v.  Norris,  6  Exch. 
to  security  of  post  obit  bond,  mortgage  of  reversionary  interest,  &c, 
Hawker  v.  Hall. -well".  25  L.  J.,  Chanc. 

Royal  British  Bank  v.  Turquand,  2 1  L.  J.,  Q.  B.  327  :  affirmed  26  L.  J.,  Q.  B. 
,  powei     ind    latiea  of  directo  ct.  c.  i  LO,  .-.  27. 

(A)  8.  •'..  25  L.  •!..  Q.  B. 

.  ict.  c.  Ill ;  11  ft  12  "V  12  &  13  Vict.  c.  108. 


JOINT    STOCK    BANKS.  417 

company;  in  other  words,  a  company  may  be   wound  up   that   is  not 
actually  indebted. (w) 

Also,  it  is  no  objection  to  such  a  petition,  to  show  that  it  is  preferred 
by  one  of  the  directors,  against  whom  a  suit  in  Chancery  is  pending, 
seeking  to  make  them  personally  liable  for  the  losses  of  the  company. (/m) 

Public  Officer. — A  public  officer  of  a  banking  company,  declaring 
"as  public  officer,  according  to  7  Geo.  IV.  c.  46  and  7  &  8  Vict.  c.  113, 
s.  47/Y»)  but,  in  truth,  suing  under  the  latter  act,  being  one  of  the 
registered  public  officers  of  the  Commercial  Bank  of  London,  dies  after 
issue  joined.  The  Nisi  Prius  record  was  made  up  from  the  plea  roll,  as 
though  he  were  alive;  the  venire  was  awarded  as  between  him  and  the 
defendants ;  no  entry  was  made  on  the  plea  roll  of  his  death,  or  of  the 
appointment  of  another  officer;  but  after  the  Nisi  Prius  record  was 
made  up,  a  memorandum  was  entered  upon  it,  stating  the  death,  and 
that  another  public  officer  of  the  company  had  been  appointed  to  continue 
the  proceedings;  this  was  not  stated  by  way  of  suggestion  to  the  court, 
nor  was  it  followed  by  any  statement  of  confession  by  the  defendants,  or 
a  nient  dedire  ;  and  afterwards,  the  cause  was  entered  by  the  name  of 
the  new  officer  as  plaintiff,  versus  the  defendants;  and  tried  by  a  jury 
who  had  been  returned  to  try  a  cause  in  which  the  deceased  public 
officer  was  plaintiff;  and  it  was  held,  that  the  trial  was  *irregular  r-*nn->-i 
and  unauthorized,  the  company  would  not  be  bound  by  a  judg-  L  "  -1 
ment  in  favour  of  the  defendants,  unless  the  plaintiff  was  their  public 
officer;  therefore,  it  was  material  who  was  on  the  record  as  plaintiff;  if 
the  party  suing  were  not  public  officer,  that  would  be  a  full  defence,  and 
the  court  considered  that  a  suggestion  of  the  death  was  indispensable,  (o) 

In  equity,  it  is  considered,  as  there  is  no  change  of  interest,  to  be  un- 
necessary to  file  any  supplemental  bill,  in  order  to  make  a  new  registered 
public  officer  party  to  the  suit.(p) 

Prosecutions  of  Officers  of  the  Bank. — As  to  the  criminal  liability  of 
persons  connected  with  joint  stock  banks,  the  following  is  the  state  of 
the  law  at  present: — Early  in  the  reign  of  the  Queen,  an  act  was  passed 
to  amend  the  law  relative  to  legal  proceedings,  by  and  against  members 
of  banking  companies;^)  but  this  statute  only  embraced  proceedings  at 
law  and  in  equity.  In  the  4th  year  of  Victoria,  an  act  extending  the 
provisions  of  the  former  was  passed,  making  liable  to  prosecution,  in  the 
name  of  the  public  officer  of  the  company,  any  member  of  the  company, 
for  frauds,  &c,  committed  with  respect  to  the  property  of  the  company; 
thus,M  if  any  person  or  persons,  being  a  member  or  members  of  (any 
joint  stock  bank,)  shall  steal  or  embezzle  any  money,  goods,  effects,  bills, 
notes,  securities,  or  other  property  of,  or  belonging  to,  any  such  joint 
stock  bank,  or  shall  commit  any  fraud,  forgery,  crime,  or  offence  against, 

(m)  In  re  St.  Marylebone  Banking  Company,  1  De  G.  &  S.  585 ;  affirmed  1  Hall 
&  Tw.  100. 

(«)  See  supra,  p.  475. 

(o)  Barnewall  v.  Sutherland,  9  C.  B.  380. 

(p)  Butchart  v.  Dresser,  18  L.  J.,  Chanc.  198;  10  Hare.  453,  S.  C. 

(q)   1  &  2  Vict.  c.  96. 

(>•)  3  &  4  Vict.  c.  Ill,  s.  2;  made  perpetual,  5  &  6  Vict.  c.  85. 


H8         GRANT  OX  THE  LAW  OF  BANKING. 

or  with  intt'iit  to  injure  or  defraud,  any  Buoh  joint  stock  bank,  such 
member  or  members  shall  Ik-  liable  to  indictment,  information,  prosecu- 
tion, or  other  proceeding,  in  the  name  of  any  of  the  officers,  for  the  time 
being,  of  any  Buoh  joint  stuck  bank,  (in  whose  name  any  action  or  suit 
*might  be  lawfully  brought  againsi  any  member  or  members  of 
L  "J  any  such  joint  stock  hank.)  for  every  Buch  fraud,  forgery, crime, 
or  offence,  and  may,  thereupon,  be  lawfully  convicted,  as  if  such  person 
or  persons  had  not  been,  or  was,  or  wen-,  a  member  or  members  of  such 
joint  stuck  hank  ;  any  law,  usage,  or  custom,  to  the  contrary  notwith- 
standing. 

A  conviction  of  larceny  or  embezzlement,  is  nut  objectionable,  for  the 

-  m  that  the  defendant  is  himself  a  shareholder  in  the  company j(s) 
and,  in  such  case,  the  property.  &c,  must  he  laid  to  he  in  the  puhlic 
officer  of  the  company  )(t)  where  the  defendant  i-  the  public  officer,  it 
seems  the  property  is  to  he  laid  in  the  company. 

But  a  manager  of  a  branch  bank,  who  has  authority  to  make  advai 
■i>  part  of  the  business  of  the  concern,  to  customers,  and  being  himself  a 
customer,  makes  such  advances  to  himself,  unknown    to  the    directors, 
without   giving  any  security,   it  is  said,  cannot  be  convicted  either  of 
larceny  or  embezzlement,  (it) 

The  principle  of  this  decision  must  not,  it  is  conceived,  be  assumed  to 
0  •  this  :  that  the  defendant  having  authority  as  manager,  to  make 
advances  to  customers  generally,  had  authority  to  make  advances,  as 
manager,  to  himself,  as  customer,  for  this  was  not  the  real  ground,  it 
would  appear,  on  which  the  case  proceeded  ;  the  hank  were  covered  by 
his  bond  (with  sureties)  given  by  him,  on  coming  into  his  office  of 
manager,  against  the   amount  which    he   had    advanced   to   himself;    ami 

there  were  various  circumstances,  as  his  remaining  in  the  neighbourhood 

after  voluntarily  stating  the  amount  he  had  advanced  to  himself,  until 
hi-  arrest  on  the  charge  of  larceny.  &c.  &o.,  all  which  together,  left  it 
impossible  to  say  that,  in  this  particular  case,  the  charge  of  larceny  or 
embezzlement  could  be  maintained. 

.- 1  .  ,,  *The  general  ground — that  a  manager  of  a  bank,  inasmuch  SB 
L  J  he   has   authority  to  advance   to   customers,  has  authority  to  ad- 

vance to  himself  as  a  customer,  and  therefore  cannot  he  convicted  of  em- 
bezzlement, for  surreptitiously  appropriating  the  funds  in  the  hank,  by 
means  of  making  advances  to  himself — seems  to  he  untenable,  Btanding 
alone,  and  without  other  circumstances  elucidating  and  explaining  the 
real  character  of  the  acts  done.  For  the  general  rule  of  law  is  clear:  a 
man  cannot  do  a  valid  act  to  himself ;  thus,  a  bishop  in  his  oapaoity, 

afi  he  is  bishop,  cannot  make  a  lease  to  himself,  as  he  is  John  Stiles;  the 

same  person  cannot  he  donor  and  donee \  a  man  cannot  pay  to  himself, 
or  contract  with  himself 

(x)  Reg.  v.  Atkinson.  0.  &  Mar.  525  ;  2  Mood.  ('.  ('.  278. 

Chapman  v.  Milvain,  .">  Exch.  61  :  Welsby,   Irch.  Crim.  Plead,  and  Kvid.  35, 
L2th  «(]it. 
(u)  Reg.  v.  Brans,  Glouc.  Sum.  As.  1856,  cor.  Wightman,  J.     The  bank  was  a 
copartnership  under  7  Geo.  IV.  e.  16. 

3(      \  in    Abr.  title,  lliins.lt:   per  Pollock,  C.  B.,  2  Excb.  597  :  Fincb,  Law, 


JOINT    STOCK    BANKS.  419 

Hence,  if  the  directors  could  authorize  the  manager  to  do,  whai  tl  i 
law  says  cannot  be  done,  at  any  rate  it  will  not  be  presumed — it  might 
be  urged — that  they  have  done  so,  in  any  case :  and  if  not,  the  advance 
to  himself  is  no  better  than  an  illegal  appropriation,  for  which  he  is 
punishable;  for  it  cannot  have  a  legal  effect;  it  is  a  nullity,  which  the 
directors  could  not  waive. 

In  truth,  the  local  manager  of  a  branch  bank  is  placed  in  a  position, 
necessarily  of  so  confidential  a  character,  as  to  make  it  not  unfrequent, 
as  the  experience  of  courts  of  justice  shows,  for  directors  to  omit  the 
proper  means  of  scrutinizing  his  proceedings,  and  practically  enforcing 
his  responsibility.  For  instance,  where  a  bank  has  various  branches, 
with  local  managers  at  each,  a  managing  director  visits  each  once  a 
quarter,  and  examines  the  quarterly  balance  sheet,  which  is  made  out 
against  his  visit,  by  the  manager,  aided  by  the  cashier  or  chief  clerk ; 
cases  which  have  been  brought  before  the  courts,  demonstrate  that,  in 
general,  by  means  of  an  understanding,  or  collusion  between  the  two,  a 
balance  *sheet  may  be  concocted,  so  as  to  keep  the  managing  r+Rn4-i 
director,  to  almost  any  extent,  in  the  dark,  as  to  the  real  state  of  *-  -* 
the  business,  unless  he  checks  the  balance  sheet,  by  the  ledger,  &c,  and 
insists  upon  seeing  that  securities  for  advances  are,  at  least,  forthcoming. 
What  is  the  value  of  such  securities  must,  at  any  rate,  in  the  first  in- 
stance, be  judged  of  by  the  local  manager,  to  whom  directors  allow  the 
power  of  making  advances  at  his  own  discretion. 

The  directors,  whether  of  banking  copartnerships,  or  of  joint  stock 
banks,  probably  would  find  it  difficult  to  support  the  absolute  delegation 
of  their  duty  of  guiding  and  conducting  the  business  to  a  local  manager ; 
the  shareholders  might  well  allege,  "  we  elected  you,  on  the  faith  we  put 
in  your  personal  qualifications  of  prudence,  caution,  and  integrity  in  the 
conduct  of  business ;  we  relied  on  your  judgment,  to  decide  in  what  way 
the  funds  of  the  bank  should  be  invested,  what  accomodation  should  be 
granted,  and  to  whom,  and  on  what  securities :  this  is  a  personal  trust, 
and  a  personal  trust  cannot  be  delegated." 

In  such  a  case  as  that  of  the  manager  of  the  Tewkesbury  Bank  just 
mentioned,  if  loss  were  to  accrue  to  a  bank,  from  the  imprudence  or 
fraud  of  the  local  manager,  for  which  it  were  shown  that  opportunity 
had  been  afforded,  by  the  neglect  of  the  managing  director,  Ue  might 
possibly  be  held  liable  for  the  whole,  to  the  shareholders. 

Again,  can  directors  authorize  a  local  manager  to  lend  the  monej  "t 
the  bank  at  his,  not  their,  discretion  ? 

The  shareholders  appoint  the  directors,  in  consequence  of  the  faith 
which  they  repose  in  their  character  for  skill,  and  integrity ;  for  vigilance, 
prudence,  sagacity,  experience  in  banking  concerns,  which  the  directors, 
as  individuals,  possess;  it  is  a  personal  trust,  and  the  shareholders  have 
a  right  to  expect  and  require  that  these  personal  qualities  shall  be  exerted, 
not  only  to  save  them  from  loss,  but  to  realize  profits  upon  their  capital 
subscribed  into  the  concern. 

19  ;  Wood  v.  Mayor  of  London,  12  Mod.  669;  Litt.  s.  168  ;  Wingate,  Max.  168  ; 
Collinson  v.  Lister,  20  Beav.  356;  per  Tindal,  C.  J.,  3  M.  &  Gra.  580;  Prest.  Shew. 
Touchstone,  212. 


420  GRANT    OH    THE    LAW    OF    BANKING. 

The  customers  lend  their  money  to  the  bank,  in  consequence 
[*60o]  *ajso  of  tjRi  }-;ijtll  wnjcjj  fchey  ],.ni.  i„  the  above  qualities  of  the 

directors,  and  in  the  confidence  which  those  qualities  inspire,  that  the 
deposits  -hall  he  bo  dealt  with,  as  to  be  available  at  all  times;  this  also 
i-  a  personal  trust. 

The  directors,  therefore,  are  clothed  with  a  double  trust;  &n& delegatus 
non  potest  delegari;  hence,  it  Beems,  they  cannot  legally  make  over  their 
duties  to  the  discretion  of  any  one. 

If  it  be  urged  the  directors  might  dispense  with  these  rules,  in  favour 
of  the  manager;  the  answer  is  twofold  ;  first,  that  they  have  actually  done 
bo  in  any  case,  cannot  be  implied  or  assumed,  it  must  he  proved;  for  it 
will  never  be  assumed,  that  a  person  has  actually  done  that  which  then- 
is  a  doubt  whether  he  can  legally  do  at  all;  secondly,  this  is  not  a  case 
within  the  maxim,  quilihet potest  renunciare  juri pro  s<  introducto;  for 
that  maxim  applies  to  the  case  of  persons  who  are  dealing  with  their  own 
property,  or  their  own  rights,  or  responsibilities  only,  which  is  not  the 
of  directors. 
On  these  grounds — and  perhaps  others  might  be  added — it  is  submitted 
to  be  very  difficult  to  support  the  proposition,  that  a  manager  of  a  branch 
bank  cannot  be  made  liable  for  larceny,  for  surreptitiously  advancing  to 
himself. 

I:  -ides  the  above  cases,  where  criminal  proceedings  may  be  taken 
against  directors,  and  other  officers  of  joint  stock  banks,  they  may  be 
ded  against  on  the  bankruptcy  of  the  company,  for  misconduct,  by 
prosecution,  under  7  &  <s  Vict.  c.  Ill,  s.  27. 

Past  Book. — The  course  of  banking  business  in  London,  makes  tie 
only  general  mode  of  stating  and  adjusting  accounts  between  bankers 
and  their  customers  residing  in  or  near  the  metropolis,  to  be  as  follows, 
respectively  : — 

A  bonk,  .ailed  a  pass  hook,  is  delivered  by  the  bankers  to  the  customer, 
in  which,  at  the  head  of  the  first  page,  and  *there  only,  the 
L  "     J  bankers,  by  the  name  of  their  firm,  are  described  a-  the  debtor, 
and  the  customer  as  the  creditor  in  the  account;  on  the  debtor  side 
are  entered  all  sums  paid  to,  or  received  by  the  bankers,  on  account 
of  the  customer,  and  on  the  credit  side,  all  sums  paid  to  him,  or  on  his 
unt»and    the  said   entries   being  summed  up  at  the   bottom  of  each 
page,    the   amount  of  each,    or   the   balance  between   them,   is   carried 
over  to  the  next  folio,  without  further  mention  of  the  names  of  the 
parties,  until  the  book  being  full,  it  becomes  accessary  to  deliver  a  fresh 
one  to  the  customer.     For  the  purpose  of  having  the  book  made  up  by 
the  bankers  from  their  own  books  of  account,  the  customer  returns  it 
to  them  from  time  to  time,  and  the  proper  entries  being  made  by  them 
Up  to  the    day  on  which  it  IS  left  for  that  purpose,  they  hand  it    again  to 
th-  customer,  who  thereupon   may  examine  it,  ami  if  there    appears  any 
error  or  omission,  it  is  his  business  to  send  it  hack  to  be  rectified;  if  he 
does  not.  his  Bilence  is  regarded  a-  an  admission  that  the  entries  an-  cor- 
rect ;  hut  no  other  settlement,  statement,  or  delivery  of  accounts,  or  an\ 
other  tran-action.  which  can  he  regarded  a-  tin'  closing  of  an  old,  or 
ing  of  a  new  account,  or  a-  varying,  renewing,  or  confirming,  (in 


JOINT    STOCK    BANKS.  121 

respect  of  the  persons,  or  the  parties  mutually  dealing,)  the  credit  given 
on  either  side,  takes  place  in  the  ordinary  course  of  business,  unless  when 
-the  name,  or  firm  of  one  of  the  parties  is  altered,  and  a  new  account 
thereupon  opened  in  the  new  name,  or  firm. 

The  course  of  business  is  the  same  between  such  bankers  and  their 
customers,  resident  at  a  distance  from  the  metropolis,  except  that  to  avoid 
the  inconveniences  of  sending  and  returning  the  pass  book,  accounts  arc, 
from  time  to  time,  made  out  by  the  bankers,  and  transmitted  to  the  cus- 
tomer in  the  country,  when  required  by  him,  containing  the  same  entries 
as  are  made  in  the  pass  book,  but  with  the  names  of  the  parties  debtor 
and  creditor  at  the  head,  and  with  the  *balance  struck  at  the  pgQy-i 
foot  of  each  account,  and  his  silence,  &c,  is  regarded  as  be-  L 

fore.(» 

Before  the  alteration  of  the  usury  laws,  the  usage  of  Liverpool  was 
held  to  be  good  and  valid,  by  which  a  balance  was  struck  every  quarter, 
and  the  account  sent  to  the  merchant,  &c,  and  then  the  balance,  if 
against  the  merchant,  was  made  to  carry  interest  for  the  next  quarter, 
and  so  on.(z) 

Under  special  circumstances,  accounts  between  banker  and  customer 
are  admitted  in  equity  from  the  necessity  of  the  case,  and  for  the  conve- 
nience of  mankind,  in  favour  of  the  party  writing  them;  one  species  of 
such  necessity  is,  where  the  party  presenting  such  evidence,  cannot, 
from  the  nature  of  things,  produce  evidence  aliunde,  in  support  of  the 
point,  which  his  own  accounts  are  adduced  to  prove ;  but  the  court  must, 
in  all  cases,  have  the  means  placed  before  it,  of  judging  whether  the 
special  circumstances  are  sufficient  to  justify  the  admission  of  such  ac- 
counts in  the  particular  instance.  One  circumstance  of  this  nature, 
would  be  the  duty,  opportunity,  or  practice  of  the  opposite  party,  to  ex- 
amine, audit,  &c,  the  accounts,  &c.(«) 

The  pass  book  between  a  bank  and  a  joint  stock  company  is  a  good 
source  of  evidence,  to  show  that  the  bank  paid  to  the  company,  calls  due 
from  A.  j(6)  one  of  the  plaintiffs  (the  banking  partnership,)  being  trea- 
surer of  the  company  and  A.  a  subscriber. 

Credit 'given  in  a  pass  book  binds  the  bankers;  for  by  entering  the 
sums  to  the  customer's  credit,  they  lead  him  to  suppose  that  they  had 
received  them  on  his  account;  they  *alter  his  situation,  and  r*(;o8"| 
therefore  shall  not  be  allowed  to  say,  that  the  items  had  never  L  J 
been  received, (c)  unless  they  can  clearly  show  that  the  entries  were  made 
by  mistake. (cZ) 

But  this  is  subject  to  the  proviso,  that  the  entries  in  the  pass  book  be 

(y)  See  the  custom  of  dealing,  as  found  by  the  master,  Devaynes  v.  Noble,  1 
Meriv.  535,  536.  In  the  case  of  lunatics,  such  silence  is  not  presumably  acqui- 
escence ;  Howard  v.  Digby,  2  Cla.  &  F.  660. 

(z)  Caliot  v.  Walker,  2  Anstr.  495. 

(a)  Symonds  v.  Gas  Light,  &c,  Co.,  11  Beav.  283. 

(6)  Alexander  v.  Barker,  2  Cro.  &  J.  135 ;  see  Foster  v.  M'Mahon,  11  Ir.  Eq.  R. 
287  ■  Chalmers  v.  Bradley,  1  Jac.  &  W.  65.  But  pass  book  not  evidence  that  a 
given  person  was  provisional  director  of  an  abandoned  company,  16  C.  B.  671. 

(c.)   Shaw  v.  Dartuall,  6  B.  &  C.  57. 

(rf)   Shaw  v.  Picton,  4  B.  &  C.  715. 


GRANT  OX  THE  LAW  OF  BANKING. 

properly  made  on  each  side  of  it;  a  pass  book,  with  entries  on  one  side 
only,  is  not  evidence  of  a  Bottled  account  between  the  bank  and  the  cue- 
tomer,  although  the  book  is  kept  by  the  customer,  without  objection  to 
the  entrh  - 

( )n  a  plea  of  nonjoinder  of  a  partner,  the  defendant's  pass  book  may 
be  evidence  against  the  plaintiff,  with  whom  it  was  kept,  if  credit  be 
given  in  it  t<>  the  defendant  solely,  in  support  of  the  plea.(/) 

A  cashier  of  a  banking  house,  upon  his  examination  as  a  witness  in 
chancery,  declared  himself  to  have  ascertained  from  the  clearing  book, 
kept  by  him  in  his  own  handwriting,  that  a  certain  sum  of  money  was 
paid  in  notes  of  the  Bank  of  England,  numbered  so  and  so  respectively; 
the  witness  proceeding  solely  on  his  knowledge  of  the  book,  and  of  his 
own  handwriting,  and  not  from  any  independent  recollection  of  the  fact 
sed  to.  This  cannot  be  received  as  evidence  of  the  fact  deposed  to, 
though  it  may  furnish  ground  of  further  inquiry. (.7) 

The  pass  book  commonly  is  sent  with  a  servant,  etc.,  who  is  employed 
to  obtain  money  from,  or  to  hand  it  into,  the  bank.  It  may  be  of  service 
to  persons  having  dealings  with  bankers,  to  be  aware  of  the  proper  mode 
of  proceeding,  in  case  any  one  sent  with  money  to  their  banker,  appro- 
priates the  money. 

Where  there  is  nothing  to  show  that  the  person  intrusted  intended,  on 
l~*f  0Q1  rece^v^n»  the  money,  to  steal  it ;  as,  for  instance,  *if  it  appear, 
'  J  that  he  has  conceived  he  was  entitled  to  pay  himself  with  it,  on 
account  of  some  claim,  or  demand,  or  debt,  which  he  alleges  against  the 
sender,  an  action  for  money  had  and  received  maybe  brought  by  the 
sender  against  him,  subject  to  any  set-off,  which  he  may  succeed  in  esta- 
blishing.  Such  action  will,  however,  fail,  if  it  be  found  by  the  jury  at 
the  trial,  that  he  received  the  money,  with  the  intention  to  steal  it,  and 
then  feloniously  converted  it;  and  the  defendant  will  have  a  verdict  in 
the  action,  and  the  plaintiff  will  lose  the  costs,  although  the  judge  will, 
said,  give  directions,  that  the  defendant  shall  be  indicted  for  the 
felony  upon  the  verdict. (A J 

Manifestly,  however,  the  proper  proceeding  in  such  case  is,  for  the 
sender  to  commence  by  way  of  indictment. 

Colonial  /joii/.-s. — The  Winding-up  Acts  may  be  applied  to  the  settle- 
ment  of  the  affairs  of  colonial  banks,  under  certain  circumstances;  just 
i-  there  can  be  no  doubt,  that  it  is  possible,  for  a  private  banker,  carry- 
ing nil  business  in  the  colonies,  to  be  made  bankrupt  in  England:  the 
following  oases  show  this. 

A  banker  in  India,  drawing  bills  upon  bankers  in  England,  against 
other  bills  sent  thither,  on  which  lie  got  a  profit,  in  the  course  of  ex- 
change;  and  in  the  progress  qf  such  transactions,  contracting  debts  in 
England,  maybe  made  a  bankrupt  lore,  upon  an  act  of  bankruptcy  com- 
mitted by  him  in  England,  alter  he  had  quitted  India. 

\'.\   parte  Baadleeon,  2  Deac.  &  C.  534;   sec  Boardman  v.  Jackson,  2  Ball  k 

(f)  Rotey  v.  Howard.  2  Stark.  5jo 
(g)   Dupoy  v.  Truman.  2  Y.  &  OoL  Ch.  B.  341. 

Prosser  v.  Roue.  2  Car.  a  I".  121  ;  K.  v.  Jolitle,  4  T.  R.  200,  293;  2  Hale,  P. 
51*  j  see  8  A.  &  E.  528,  contra. 


JOINT    STOCK    BANKS.  423 

An  assignment  of  all  his  effects,  in  trust  for  creditors,  in  certain  pro- 
portions, executed  by  him,  whilst  resident  in  India,  is  not  an  act  of  bank- 
ruptcy, within  the  meaning  of  the  bankrupt  law.  Nor  is  such  assign- 
ment fraudulent  and  void  in  itself,  being  intended,  bona  fide,  at  the  time 
of  its  *execution,  and  assented  to,  by  the  generality  of  the  credi-  i-^pin-, 
tors.(v')  L   JiUJ 

The  affairs  of  the  Royal  Bank  of  Australia  were  actually  wound  up  in 
Chancery,  under  the  Acts  of  1848  and  1849  ;  the  petitioner  for  the 
winding-up  order,  a  shareholder  in  the  bank,  being  described  in  his  peti- 
tion, as  of  a  place  out  of  the  jurisdiction,  was  ordered  to  give  security  for 
costs,  before  his  petition  could  be  heard ;  and  proceedings  taken  in  Scot- 
land against  the  petitioner,  in  respect  of  a  debt,  due  from  the  company, 
were  held  to  furnish  proper  ground  for  winding  up,  on  his  petition.  (&) 

But  it  does  not  at  all  follow,  that  the  Courts  of  Chancery  will  wind 
up  the  affairs  of  Colonial  Banks,  under  all  circumstances  :  the  following 
case  gives  a  general  outline  of  the  rule  which  they  follow  in  applying  the 
winding  up  process  to  such  institutions  :  beyond  that  general  outline, 
the  law  does  not  yet  appear  to  be  developed ;  beyond  it,  therefore,  no 
advice,  for  the  guidance  of  persons  who  may  be  interested  in  such  ques- 
tions, can  safely  be  offered. 

The  company  called  the  Union  Bank  of  Calcutta,  was  organized  and 
established  in  India,  as  a  joint  stock  company,  in  the  year  1829,  by  per- 
sons, all  of  whom  were  then  resident  in  India,  for  carrying  on  the  busi- 
ness of  banking  at  Calcutta.  Its  constitution  was  regulated  by  two  deeds 
of  partnership,  dated  the  1st  August,  1829,  and  the  1st  August,  1839. 
By  the  latter  of  these  deeds,  it  was  provided,  that  the  business  of  the 
company  should  consist  in  issuing  notes  and  bills  of  exchange,  at  the 
office,  in  Calcutta,  and  in  discounting  bills  and  promissory  notes,  and  in 
all  other  branches  of  business,  usual  with  bankers  in  Calcutta;  and  it  was 
provided,  that  the  capital  stock  of  the  company  should  be  10,000,000, 
of  Company's  rupees. 

*By  an  Act  of  Legislature  of  Calcutta,  passed  in  1845,  the  r^p-i i-i 
Union  Bank  was  authorized  to  sue,  and  be  sued,  in  the  name  of  L  -■ 
its  secretary;  and  it  was  declared  that,  upon  any  judgment  against  the 
secretary,  execution  might  be  issued,  against  any  shareholder,  upon 
motion  made  for  that  purpose,  in  open  court ;  but  it  was  provided,  that 
that  act  should  not  extend  to  incorporate  the  Union  Bank. 

The  partnership  deeds  of  the  bank  were  executed,  at  Calcutta,  by  the 
shareholders,  and  such  deeds,  as  well  as  all  the  books,  and  accounts  of 
the  bank,  and  all  transfers  of  shares  in  the  bank,  were  always  kept  in  the 
office  of  the  bank  there,  and  in  the  custody  of  the  officers  of  the  bank 
there. 

The  meetings  of  the  shareholders  were  always  held  at  Calcutta,  and 
the  affairs  of  the  bank  were  entirely  managed  in  India.     The  directors, 

(i)  Ingliss  v.  Grant,  5  T.  R.  530;  see  Alexander  v.  Vaughan,  Cowp.  398  ;  Ex 
parte  Williamson,  1  Atk.  82  ;  see  22  L.  J.,  Chanc.  276  ;  24  id.  621  ;  plea  of  colonial 
judgment,  Bank  of  Australasia  v.  Harding,  19  L.  J.,  C.  B.  345 ;  S.  C,  9  C.  B.  001. 

(k)  Ex  parte  Latta,  3  De  G.  &  S.  186. 


424  GRANT    ON    THE    LAW    OF    BANKING. 

trustees,  secretary,  treasurer,  and  all  the  other  officers  of  the  bank,  \ 
all  resident  at  Calcutta. 

The  Union  Hank  carried  on  the  business  of  bankers  in  Calcutta,  to  a 
large  amount.  En  the  course  of  business,  it  received,  at  the  establish- 
ment, at  Calcutta,  sums  of  money,  to  the  credit  of  persons  in  London, 
and  paid  the  amounts  accordingly  in  London,  through  Messrs.  Glyn  &  Co., 
hanker-,  in  Lombard-street j  and  similar  payments  were  made  tn  Messrs. 
Grlyn  &  Co.,  in  London,  on  accounl  of  the  Union  Hank,  to  he  paid  to 
persons,  at  Calcutta,  which  were  accordingly  paid:  and  the  Union  Bank 
drew  and  issued  hills  of  exchange  and  promissory  notes,  and  granted 
letters  oi  credit,  at  Calcutta,  upon  .Messrs.  Grlyn  &  Co.,  which  were  duly 
honoured,  by  the  latter  firm  in  London,  as  agents  for  the  Union  Bank  : 
and  Messrs.  Grlyn  &  Co.,  as  agents  for  the  Uuion  Bank,  issued  similar 
notes  on  the  Union  Bank,  which  were  duly  honoured,  at  Calcutta.  The 
Union  Bank  received  the  usual  banking  pro/its  on  all  these  transactions. 
On  a  petition,  for  the  usual  order  for  winding  up  the  a  11  airs  of  the 
bank,  it  was  alleged  by  the  petitioner,  a  shareholder  of  the  company, 
resident  in  England,  that  the  banking  house  of  Messrs.  Glyn  &  Co.  was 
r*rT>1  constituted  a  place  of  *business  for  the  Union  Bank,  and  that, 
L  J  in  this  manner,  the  Union  Bank  carried  on  the  business  of 
bankers,  in  England. 

The  Union  Bank  suspended  business  in  1847,  being  greatly  indebted 
in  India,  but  haying  also  large  assets  and  liabilities,  in  England. 

Upon  the  suspension  of  payment,  an  executive  committee  was  formed, 
at  Calcutta,  for  liquidating  its  debts,  and  a  committee  of  creditors  was 
also  formed,  by  whom  a  seheine  of  contribution,  by  shareholders,  was 
framed,  by  which  the  shareholders  were  assessed,  in  sums  varying  from 
251.  per  share,  to  '2001.  per  share.  Under  this,  the  petitioner  was  assessed, 
for  -'HI/,  per  share,  on  fifteen  shares.  He  refused  to  pay;  and  an  action 
at  law  was  commenced,  against  him,  by  Messrs.  Glyn  &  Co.,  for  the 
recovery  of  5,000?.  due  to  them,  from  the  Union  Bank. 

Shareholders  in  the  bank,  to  the  number  of  sixty  and  upwards,  at  the 
time  of  its  suspension  of  payment,  were  resident  in  England. 

There  being  no  office,  of  the  Union  Bank  of  Calcutta,  in  England, 
except  the  hanking  house  of  Messrs.  Glyn  &  Co.,  personal  service  of  a 
copy  of  the  petition  was  made  on  one  of  the  partners,  of  that  firm,  at  the 
banking  house. 

A  member  and  contributory  of  the  Union  Bank,  resident  in  London, 
was  also  served,  with  a  copy  of  the  petition,  and  with  the  order  of  the 
court,  specially  fixing  the  bearing  of  the  petition. 

The  petition  was  advertized  in  six  newspapers,  at  Calcutta,  including 
the  Calcutta  Gazette,  and  also  (as  it  appears)  in  the  London  Gazette. 

The  service  on  the  contributor}  in  England,  and  the  advertisement  in 
the  London  Gazette,  were  ruled  to  be  sufficient,  to  satisfy  the  Winding- 
up  Act,  Is  19,  section  1. 

On  the  above  fact-,  Vice-Chancellor  Knight  Bruce  said,  he  assumed, 
(without  however  deciding,)  that,  according  to  the  true  construction  of 
the  Winding-up  Acts,  the  court  had  power  to  direct  the  winding  np  of 


SAVINGS'    BANKS.  425 

the  company,  so  far  as  it  could  *be  done  in  the  absence,  from  the  r*f  10-1 
jurisdiction,  of  a  large  number  of  shareholders ;  but  he  also  stated  L  J 
that  it  was  not  in  every  case,  within  the  provisions  of  the  acts,  that  the 
court  would  interfere  under  them ;  for  he  held  it  was  incumbent  on  the 
court,  not  to  act  under  those  statutes,  when  there  were  judicial  grounds 
for  holding  it  not  to  be  expedient  to  do  so  : — that  is,  (jis  it  seems,)  the 
court  will  not  act,  where  it  is  not  shown  that  there  exist,  in  this  country, 
the  means  of  doing  substantial  justice,  or  more  good  than  harm,  by  so 
interfering.  But  ou  the  whole  that  he  had  heard,  lie  was  of  opinion, 
that  much  more  mischief  would  arise  from  acting  on  this  petition,  than 
from  declining  to  interfere;  and  he  left  the  petitioner  to  the  remedies, 
which,  by  the  laws  of  this  country,  or  of  India,  or  of  both,  were  open  tn 
him,  independently  of  the  Winding-up  Acts.(^) 


CHAPTER   XVII.  [*614] 

savings'  banks. 

A  Savings'  Bank  is  defined  to  be  any  institution,  in  the  nature  of  a 
bank,  formed  for  the  purpose  of  receiving  deposits  of  money,  for  the 
benefit  of  the  persons  depositing,  to  accumulate  the  produce  of  so  much 
thereof,  as  shall  not  be  required  by  the  depositors,  their  executors,  or 
administrators,  at  compound  interest,  and  to  return  the  whole,  or  any 
part,  of  such  deposit,  and  the  produce  thereof,  to  the  depositors,  their 
executors,  or  administrators — deducting  out  of  such  produce,  so  much  as 
shall  be  required  for  the  necessary  expenses,  attending  the  management 
of  such  institution — but  deriving  no  benefit  whatsoever  from  any  such 
deposit  or  the  produce  thereof,  (a) 

The  society  or  body  of  persons  who  have  set  on  foot,  and  wish  tn 
establish  and  maintain,  the  institution,  with  the  powers,  privileges,  and 
advantages,  which  the  Savings'  Banks  Acts  give  to  them,  must  cause 
the  rules  and  regulations  for  the  management  of  their  institution  to  be 

(I)  In  re  Union  Bank  of  Calcutta,  (Watson's  case,)  3  De  G.  &  S.  253.  Everj 
banking  company  of  more  than  six  persons,  carrying  on  business  in  England  is 
made,  by  s.  48  of  7  &  8  Vict.  c.  113,  a  trading  company  within  the  Winding-up 
Act  of  1844,  (7  &  8  Vict.  c.  Ill  ;)  but,  N.  B.,  by  11  &  12  Vict.  c.  45,  s.  6,  in  case 
any  petition  for  adjudication,  &c,  shall  have  been  granted  against  any  companj 
under  7  &  8  Vict.  c.  Ill,  no  petition  for  winding  up  shall  be  presented  by  any 
other  person  than  by  the  creditors'  assignee  of  the  estate,  &c,  of  the  company, 
who  by  order  of  the  court  of  bankruptcy,  but  not  otherwise,  may  present  a  petition 
for  an  order  for  winding  up.  See  further  on  this  subject,  Brettell  v.  Davis,  7  Exch. 
307  ;  In  re  Warwick,  &c.  Railway  Company,  5  De  G.,  M.  &  G.  495,  499 ;  In  re  Nor- 
wich Yarn  Company,  5  De  G.,  M.  &  G.  505  ;  S.  C,  13  Beav.  426 ;  Prescott  v.  Ha- 
dow,  5  Exch.  726;  Beardshaw  v.  Lord  Londesborough.  11  C.  B.  498;  Hill  v.  Lon- 
don, &c,  Assurance  Company,  28  L.  T.  67,  and  the  Case  of  the  Royal  British  Bank 
now,  (Nov.  1856.)  sub  judice. 

(a)  9  Geo.  IV.  c.  92,  s.  2.  See  proviso  there  as  to  sanction  of  Quarter  Sessions. 
&c.     Deposit  of  rules  with  clerk  of  peace  abrogated  by  7  &  8  Vict.  c.  83,  s.  18. 


420         'III  ANT  OH  THE  LAW  OF  BANKING. 

entered,  deposited,  and  tiled  in  particular  modes,  to  be  found  detailed 
and  Bpeoified  in  the  statutes  ;(7,)  when  they  will  become  entitled  to  those 
powers,  &c.(a\ 

Deposits. — No  person  can  be  admitted  as  a  depositor  for  the  first  time, 
without  making  a  disclosure  of  the  came,  profession,  business,  occupa- 
tion, calling  and  residence  of  such  person. (c) 

r*n  '1  *  Further,  such  person  must,  at  such  first  time,  and  as  often  as 
L  '  J  required  by  the  trustees,  or  managers,  make  and  sign  a  declara- 
tion, of  not  being  entitled  to  any  deposit  or  benefit  from  any  other  savings' 
bank  :  and  this  under  pain  of  forfeiting  such  other  deposit,  &c.  :  such 
declaration  to  be  filed  and  kept  by  the  trustees  ;  a  printed  notice  of  the 
regulation  to  this  effect  being  affixed  in  the  bank;  and  a  copy  of  the  de- 
claration, with  the  penalty,  annexed  to,  or  printed  at  the  beginning  of, 
the  deposit  book.^/j 

Xo  one  can  deposit  more  than  30/.  in  any  one  year,  exclusive  of  com- 
pound interest.  (>) 

M>rever,  deposits  cannot  be  received,  from  any  depositor,  so  as  to 
make  the  sum,  which  he  shall  be  entitled  to,  exceed  150/.  on  the 
whole.  (') 

Also,  although  a  depositor's  money  may  go  on  increasing,  at  compound 
interest,  until  it  reaches  the  amount  of  200/.  in  the  whole,  yet,  thence- 
forth, no  interest  shall  be  payable  on  such  deposit,  so  long  as  it  remains 
at  that  amount,  (cj 

Attempts  at  evasion  of  the  statute,  in  this  respect,  by  taking  advan- 
tage of  tin.'  clauses,  enabling  persons  to  deposit  money  in  trust  for  others, 
will  be  treated  as  follows  : — 

A.,  after  depositing  in  his  own  name,  in  a  savings'  bank,  to  the  full 
extent  allowed,  made  further  deposits  to  another  account  in  the  name  of 
himself  and  hi-  sister,  but  nominally  as  trustee  for  her,  in  this  form  : — 
••  Henry  Field,  in  trust  for  Ann  Field,"  making  a  declaration  accordingly. 
It  appeared,  on  examination,  that  the  statute,  whilst  allowing  one  person 
to  deposit  money  in  trust  for  another  person,  in  their  joint  names,  still 
left  him  at  liberty  to  withdraw  it,  without  any  communication  with  that 
person. 

A  court  of  equity,  considering  that  the  second  account  had  been 
r*Pin  °Pened  on^y  Vf'1^1  a  view  °f  evading  the  statute,  *and  not  with 
>-  'J  tie-  Intention  of  creating  a  trust,  in  favour  of  the  sister,  refused 
to  declare  her  to  be  entitled  to  the  sum  deposited  to  the  second  ao- 
count.(ee) 

In  case  a  married  woman  puts  money  in  the  hank,  or  a  woman,  who 
afterwards  marries,  does  so,  in  either  case  the  trustees  or  managers  may 
[layout  the  whole,  or  any  part,  to  her,  unless  the  husband   shall    l\\> 

(b)  8  IV.  c.  92,  ss.  3,  !  (a)  See  note  (</),  preceding  page. 

(c)  7  &  8  Vict.  c.  83,  s.  3;  3  k  A  Will.  IV.  <■.  |  i.  -.  29. 

Geo.  IV.  <■.  92,  8.  34  :  and  7  &  8  Vict.  <•.  83,  s.  3. 

Geo.  IV.  c.  92,  s.  35 ;  ami  see  s.  37.     Withdrawing  deposits  to  place  in 
bank,  s.  39.     Death  of  depositor,  having  502.  in  hank.  bs.  -i".  41, 
■\i.  ■}.".. 

(et)   Field  v.  Lonsdale,  13  Bear.  78. 


SAVINGS'    BANKS.  427 

theni  notice  in  writing  of  the  marriage,  and  requiring  payment  to  be 
made  to  him.(/) 

Deposits  may  be  received  from  the  officers  of  certain  Friendly  Socie- 
ties, duly  constituted  according  to  law,  without  restriction  as  to 
aniount,(//)  and  from  the  trustees,  &c,  of  any  charitable  or  provident  in- 
stitution, or  charitable  donation  or  bequest,  for  the  maintenance,  educa- 
tion, or  benefit  of  the  poor,  to  the  extent  of  100/.  per  annum,  and  of 
300/.  in  the  whole,  exclusive  of  interest  ;(/t)  but  funds  of  benefit  build- 
ing societies  are  not  allowed  to  be  invested  in  savings'  banks. (A 

Annuities. — Depositors  in  savings'  banks  are  enabled  to  purchase  an- 
nuities of  not  less  than  one,  nor  more  than  thirty  pounds  each;  the  pro- 
visions and  regulations  respecting  these  are  extremely  numerous,  and 
the  reader  must  be  referred  for  them  to  the  statute,  which  contains 
all  that  has  been  prescribed  by  the  legislature  respecting  this  sub- 
ject.^) 

Deposit  Book. — By  the  rules  of  a  savings'  bank,  entries  of  deposits 
were  to  be  made  in  a  book  kept  by  the  bank  for  the  purpose,  and  also  in 
a  duplicate  account  book  to  be  kept  *by  the  depositor,  which  du-  r;Kr,1 7 
plicate  was  to  be  a  voucher  for  the  party  producing  it,  and  a  re-  L  J 
ceipt  for  the  bank,  when  it  was  handed  over  to  them.  Then  A.  deposited 
in  the  name  of  B.  a  sum  with  the  bank,  and  afterwards,  without  B.'s 
authority,  got  back  the  money,  and  delivered  up  to  the  bank  the  dupli- 
cate account  book. 

Nevertheless,  B.,  it  was  held,  still  continued  a  depositor;(A  showing 
the  bank  to  be  liable  for  having  allowed  B.'s  money  to  be  drawn  out 
without  B.'s  license. 

Provision  must  be  made  in  the  rules  of  all  savings'  banks  for  every  de- 
positor, once  a  year  at  least,  causing  his  deposit  book  to  be  produced  at 
the  bank  for  the  purpose  of  being  examined. (m\ 

Remedies  of  Depositors. — Any  dispute  arising  between  the  trustees 
and  managers,  and  any  individual  depositor,  &c,  or  any  person  claiming 
to  be  entitled  to  any  deposit,  is  to  be  referred,  in  writing,  to  the  barris- 
ter at  law,  appointed  under  the  Savings'  Banks,  &c,  Acts,  and  his 
award  is  to  be  final;  the  submission  and  award  to  be  free  of  stamp 
duty.(?i) 

Now,  the  effect  of  this  clause  is  probably  the  same  as  was  repeatedly 
held  to  be  that  of  the  provision  for  reference  under  a  former  statute ; 
viz.,  that  no  action  is  maintainable  by  depositors  against  trustees  or  man- 
agers, to  recover  their  deposits ;  they  must  have  recourse  to  the  mode  of 
reference  to  the  barrister. (o\ 

(/)  7  &  8  Vict.  c.  83,  s.  12. 

(g)  17  &  18  Vict.  c.  50,  s.  2.  This  does  not  include  the  Friendly  Societies  un- 
der 17  &  18  Vict.  56,  s.  8.  See  also  18  &  19  Vict.  c.  63,  ss.  32,  33,  36  ;  and  see  first 
sched.  repealing  17  &  18  Vict.  c.  50,  s.  2.  (A)  9  Geo.  IV.  c.  92,  s.  27. 

(i)  6  &  7  Will.  IV.  c.  32,  s.  6.  (k)  16  &  17  Vict.  c.  45. 

(1)  R.  v.  Cheadle  Savings'  Bank,  1  A.  &  E.  323. 

(m)   7  &  8  Vict.  c.  83,  s.  5. 

(n)  7  &  8  Vict.  c.  83,  s.  14.  He  may  inspect  books  and  administer  oath,  id.  s. 
15.  He  may  proceed  ex  parte  on  sending  notice,  &c,  id.  s.  14;  see  Lynch  v.  Fitz- 
gerald, 15  Law  Times,  372. 

(o)  See  8  Bing.  394  ;  6  A.  &  E.  952  ;  21  L.  J  ,  Q.  B.  169. 


.  LN1    0  X    T  II  B    L  A  W    0  F    B  A  X  K  I X  U. 

:  where  the  money  of  a  depositor  has  been  embezzled, 

it  seem<  Ik-  would  nut,  ondei  most  circumstances,  at  any  rate,  h:.-. 
right  of  action  against  the  trustees;^)  but,  perhaps,  as  trustees  and 
managers  art-  now  made  *personally  liable  for  moneys  actually  re- 
L  '  -I  ceived  ami  not  paid  over  by  them,  &c.,  there  might  be  room  to 
contend,  that  an  action  would  lie  in  favour  of  th^  depositor,  whose  mo- 
ney had  been  £  !.  &c. ;  but  the  nut  paying. over,  at  the  next  day 
on  which  the  bank  is  open,  by  any  person  holding  any  situation  or  ap- 
pointment in  a  savings'  bank,  is  a  misdemeanour,  for  which  such  persons 
are  criminally  responsible.^) 

Investments. — The  trustees  are  to  pay  into  tin;  Bank  of  England  all 
sums  to  be  invested,  that  is  to  say,  all  the  deposits  thej  receive,  except 
such  sums,  as  from  time  to  time,  it  is  incumbent  on  them  to  keep  in 
hand,  to  answer  the  exigencies  of  the  savings'  bank;  and  they  are  nut  to 
invest  in  any  other  security  ;(r)  and  all  moneys  so  paid  into  the  Uank  of 
England,  are  to  be  invested,  from  time  to  time,  in  bank  annuities  or  ex- 
chequer bills,  and  the  interest,  as  it  becomes  due  thereon,  is  to  be  in- 
rested  in  government  annuities  or  exchequer  bills. (.v) 

Annual  Accounts. — The  trustees,  or  managers,  are  annually  to  pre- 
general  statement  of  the  funds  of  the  savings'  bank,  invested  in 
the  Bank  of  England,  showing  the  balance  due  to  all  the  depositors,  the 
expenses  incurred,  and  stating  in  whose  hands  the  balance  shall  then  be, 
with  other  particulars,  (for  which  reference  must  be  made  to  the  statutes 
themselves,)  every  depositor  being  entitled  to  a  printed  copy  on  payment 
of  one  penny. (^) 

Officers. — Every  treasurer,  actuary,  or  cashier,  having  receipt  or  cus- 

_lf -.  tody  of  money  -ubscribed  or  deposit  id  for  the  ^purpose  of  the 
L  -I  bank,  or  any  interest  or  dividend  from  time  to  time   accruing 

therefrom  ;  and  every  officer  receiving  -alary  or  allowance,  must  gi 
curity,  by  bond,  to  the  clerk  of  the  peace,  or  town  clerk,  &o.,  free  of 
-tamp  duty,(«)  to  be  transmitted  for  custody  to  the  commissioners  of  the 
national  debt.(x) 

Besides  the  security  of  the  bond,  savings'  bank  depositors  have  this 
further  security  given  by  later  enactments,  under  which  they  are  entitled, 
in  case  of  the  bankruptcy  of  an  officer  with  fund-  belonging  to  tin-  bank 
in  his  hands,  to  have  the  money  due  to  the  hank  replaced,  in  full,  out 
.,;'  hi  before  any  other  creditors  are  paid  anything.     The  follow- 

ing decisions  illustrate  this: — 

A  draper  was  appointed  actuary  and  cashier  of  a  savings'  bank,  a  rule 
of  which  was,  that  one  or  inure  members  of  the  committee  Bhould  attend 
at  tlie  cashier's  shop  to  the  deposits;  this,  however,  was  nut 

-      u.  v.  Mildenhall,  &c,  >;  A.  .v  B.  952. 
I  .v  8  Vict.  o.  83,  s.  5. 

.11:  see  BS.  12,  13. 
.  L6. 
(i)  9  Geo.  IV.  i  .17:  and  A.s  to  computation  and  rate  of 

-::,  bs.  1,  2,  in. 
i  Geo    [V.       - '■  s.  7. 
7  &  8  Vict  to  delivery  up  to  be  cancelled. 


SAVINGS'    BANKS.  429 

attended  to,  and  the  cashier  was  permitted  to  receive  the  deposits.  He 
became  bankrupt,  and  the  deposits  were  held  not  to  be  "moneys  in  bis 
hands  by  virtue  of  his  office,"  so  as  to  be  claimable  in  full  by  the  sayings' 
bank,  under  3  &  4  Will.  IV.  c.  14,  s.  28. 

That  enactment  is  to  this  effect : — If  any  person  appointed  to  any 
office  in  a  savings'  bank,  and  having  in  his  hands  or  possession  by  virtue 
of  said  office  or  employment,  any  moneys  belonging  to  such  savings' 
bank,  shall  become  bankrupt,  his  assignees  shall  pay  out  of  his  assets 
all  such  sums  before  any  other  debts  are  paid. 

But  the  provision  being  against  common  right,  must  be  construed 
stfictly  :  then  the  duty  of  the  office  of  actuary  did  not  include  the  receipt 
of  money,  which  duty,  by  the  rule  above  referred  to,  was  attributed  to 
one  or  more  members  of  the  committee ;  nor  did  the  duty  of  cashier 
include  the  receipt  of  money  for  the  same  reason,  and  because  the  duty 
*of  a  cashier  is  to  pay  money;  consequently  the  moneys  were  r^p9n-i 
not  in  his  hands  at  the  time  of  the  bankruptcy,  by  virtue  of  his  L  ~  J 
office.  The  petition  of  the  trustees  of  the  savings'  bank  to  be  paid  in 
full  the  2,206?.,  in  which  the  draper  was  a  defaulter,  was  accordingly 
dismissed  with  costs,  (jf) 

It  must  be  carefully  observed,  moreover,  that  the  stat.  3  &  4  Will. 
IV.  c.  14,  s.  28,  only  applies  to  savings'  banks  which  have  conformed 
to  9  Geo.  IV.  c.  92,  s.  6,  which  prevents  from  having  the  benefit  of  the 
act  any  savings'  bank,  the  rules  of  which  do  not  provide  that  no  person 
being  treasurer,  trustee,  or  manager  of  such  institution,  or  having  any 
control  in  the  management  thereof,  shall  derive  any  benefit  from  the 
deposits  in  the  bank,  except,  &c. 

It  is  proper  also  to  notice,  that  the  certificate  of  the  barrister  of  con- 
formity to  9  Geo.  IV.  c.  92,  is  not  conclusive  proof  in  this  respect. (2) 

In  case  then  of  the  bankruptcy  of  any  person  in  office  in  a  savings' 
bank,  the  savings'  bank  can  only  be  paid  in  full  his  debt  to  them,  when 
they  have  conformed  in  all  respects  to  the  stat.  9  Geo.  IV.  c.  92,  and 
there  has  been  no  negligence  or  laches  on  the  part  of  the  manager  or 
committee,  &c,  of  the  institution. 

The  rule  to  be  attended  to  in  such  applications  is  this — the  savings' 
bank  claims  a  privilege  against  common  right — viz.  the  privilege  of 
priority  to  all  other  creditors ;  they  must  therefore  clearly  bring  them- 
selves within  the  language  of  the  enactments  which  confer  that  privilege. 

Where  a  person,  on  his  appointment  as  treasurer  of  a  savings'  bank, 
enters  into  the  usual  bond,  &c.,but  does  not  actually  receive  any  money, 
the  deposits  being  paid  by  the  managers  directly  into  a  bank,  of  which 
he  is  a  partner,  to  *the  credit  of  the  trustees  of  the  savings'  r:}:(-->i-i 
bank,  who  are  allowed  interest  on  it,  but  he  signs  the  monthly  L  "  -I 
return  to  the  National  Debt  Office,  thereby  acknowledging  the  balance, 

{y)  Ex  parte  Fleet,  4  De  G.  &  S.  52  ;  The  Dartford  Savings'  Bank,  see  1  Fonbl. 
Bank.  R.  137  ;  7  &  8  Vict.  c.  83,  s.  5.  The  bankers  of  a  Friendly  Society  are  not 
officers,  so  as  on  their  bankruptcy  to  entitle  the  society  to  be  repaid  in  full.  Ex 
parte  Harris,  De  G.  Bank.  R.  162. 

(z)  Ex  parte  Haynes,  3  M.,  D.  &De  G.  663;  S.  C,  what  is  sufficient  compliance: 
see  Ex  parte  Whipham,  3  M.,  D.  &  De  G.  564. 


430         GRANT  ON  THE  LAW  OF  BANKING. 

&c.,  to  be  in  his  hands  as  treasurer.     On  the  bankruptcy  of  the  bank. 
the  savings'  bank  recovered  in  fall. (a) 

But  it  is  not  only  in  case  of  bankruptcy  of  their  officer,  &c,  that  the 
Barings'  bank  is  entitled  to  have  sums  of  money  owing  by  him  replaced 
in  full,  in  priority  to  other  creditors,  but  further,  whenever  any  officer, 
intrusted  with  the  keeping  of  the  accounts,  or  having  in  his  hands  or 
possession,  by  virtue  of  his  office  or  employment,  any  money  or  effects  of 
the  bank,  or  any  deeds  or  securities  relating  thereto,  dies  or  becomes 
bankrupt,  or  insolvent,  or  has  any  execution,  or  attachment,  or  other 
process  issued  against  his  lands,  goods,  chattels,  or  effects,  or  makes  any 
mient  thereof  for  the  benefit  of  his  creditors, — then  his  executors, 
administrators,  or  assignees,  or  other  persons  having  legal  right,  accord- 
ing to  the  case,  or  the  sheriff  or  officer  executing  the  process  above 
referred  to,  must,  within  forty  days  after  demand,  made  by  two  of  the 
trustees,  deliver  and  pay  over  all  money  and  other  things  belonging  to 
the  bank,  and  pay  out  of  the  estate,  &c,  all  money  remaining  due,  which 
such  officer  received  by  virtue  of  his  said  office  or  employment,  before 
any  other  of  his  debts  are  paid  or  satisfied,  or  before  the  money  directed 
to  be  levied  by  the  above  process  is  paid  over  to  the  party  issuing  it.(i) 

So  that  in  an  administration  suit  the  courts  of  equity,  on  petition, 
have  ordered  the  payment  of  money  due  to  the  savings'  bank,  before 
any  report  made,  but  would  not  order  the  payment  of  the  costs  of  the 
petition. (c) 

The  clerk   in  a  savings'  bank  may  be  indicted  for  embezzlement  of 

,„„..  money,  that  he  has  received  from  a  depositor  and  ^appropriated, 
L  '  J  and  he  will  be  properly  described  as  clerk  to  the  trustees, 
although  he  is  elected  annually  by  ballot,  at  a  meeting  of  the  mana- 
;ers,(c?)  and  it  seems  that  such  indictment  might  be  supported  against  a 
clerk  to  a  savings'  bank,  equally  as  in  the  case  of  a  clerk  to  a  private 
bank,  by  proof  of  a  general  deficiency  of  inoueys  that  ought  to  be  forth- 
coming, without  showing  any  particular  sum  received,  and  not  accounted 
for.(e) 

Trustees. — All  the  effects  whatever,  and  all  rights  and  claims  belong- 
ing to  the  bank,  are  vested  in  the  trustees  for  the  time  being,  without  a 
fresh  assignment  being  necessary  on  the  death  or  removal,  &c,  of  any 
one  or  more  of  them ;(/)  so  that  they  are  somewhat  in  the  nature  of  a 
corporate  body. 

No  trustee  or  manager  can  be  made  personally  liable,  except  for  his 
own  acts  and  deeds:  he  cannot  be  made  personally  liable,  for  anything 
done  by  him,  in  virtue  of  his  office,  in  execution  of  stat.  9  Geo.  IV.  c. 
92,  except  in  cases  where  he  is  guilty  of  wilful  neglect  or  default,  (y) 

(a)  Ex  parte  RiddeU,  3  M.,  D.  &  De  G.  80 ;  see  Ex  parte  Ray,  3  Deac.  537. 
lb)  3  &  4  Will.  IV.  C.  14,s.  28. 

(c)  Hatch  v.  Lee,  10  L.  J.,  Oh.  223. 

(d)  U.  v.  Jenson,  liy.  &  Moo.  434;  see  the  rules  cited  there;  see  also  Reg.  v. 
Miller,  2  Mood.  Cro.  C.  2  19. 

K.  v.  Grove,  Ry.  k  M.  447;  decide!  b  "ven  judges;  in  gene- 

mi.  a  man  cannot  be  convicted  of  tteaUng  a  mere  balance.    Further  as  to  prose- 
cuting  clerk,  Reg.  v.  Tail's,  4  Cox,  0.  0.  10L>. 

(/)  9  Geo.  IV.  c.  92,  s.  8.  (if)  Id.,  s.  9. 


SAVINGS'    BANKS.  431 

No  trustee  or  manager  is  liable  to  make  good  any  deficiency  arising  in 
the  funds,  unless  he  shall  have  deposited,  with  the  Commissioners  for 
the  Reduction  of  the  National  Debt,  a  written  declaration  signed,  of  his 
willingness  so  to  be  answerable ;  and  he  may  limit  his  responsibility  to 
such  amount,  as  he  may  specify  therein. (7t) 

Nevertheless,  every  trustee  and  manager  is  personally  responsible  and 
liable,  for  all  moneys  actually  received  by  him,  on  account  of  or  for 
the  use  of  the  bank,  and  not  paid  over  or  disposed  of,  according  to  the 
rules.  (A) 

*A11  the  officers  may  be  called  upon,  and  are  bound  to  account  p^non 
and  deliver  up  when  duly  called  upon,  all  effects,  &c,  belong-  L  ""  J 
ing  to  the  bank  in  their  hands,  by  order  of  not  less  than  two  trustees  and 
three  managers,  or  at  any  general  meeting  of  the  trustees  or  managers : 
on  default,  the  trustees  may  exhibit  a  petition  to  the  Quarter  Sessions, 
who  may  proceed  in  a  summary  way,  and  make  such  order  upon  hear- 
ing all  parties  concerned,  as  they  shall  think  just;  such  order  to  be 
final.  (1) 

For  other  points  of  minor  importance,  the  reader  is  referred  to  the 
various  statutes  respecting  savings'  banks. (k\ 

The  legislature  has  provided,  by  special  measures,  for  the  establish- 
ment of  military  savings'  banks,  which  are  exempted  from  the  operation 
of  the  previous  enactments  respecting  savings'  banks  in  general  :(V\  and, 
in  another  statute,  for  the  establishment  of  savings'  banks  for  seamen, 
(the  deposits  not  to  exceed  150?.  in  the  whole,  in  respect  of  any  one 
account,)  which  are  subjected,  except  as  to  the  amount,  to  the  operation 
of  the  previous  enactments  respecting  savings'  banks  in  general. (m) 

Various  points  respecting  questions  arising  on  the  relations  of  bankers 
to  savings'  banks,  to  whom  they  act  as  treasurers,  &c,  have  been  already 
discussed, (to)  and  need  not  be  again  treated. 

(h)  7  &  8  Vict.  c.  83,  s.  6.  (i)  9  Geo.  IV.  c.  92,  s.  10. 

(k)  Exemptions  from  stamps  and  other  duties  in  favour  of  savings'  banks,  9  Geo. 
IV.  c.  92,  ss.  5,  40,  44;  3  &  4  Will.  IV.  c.  14,  s.  19  ;  7  &  8  Viet.  c.  83  ;  from  income 
tax,  5  &  6  Vict.  c.  35.  s.  88. 

(I)  5  &  6  Vict,  c   71,  see  s.  6  ;  8  &  9  Vict,  c,  27,  see  s.  G ;  12  &  13  Vict.  c.  71. 

(m)   17  &  18  Vict.  c.  104,  s.  180. 

(?i)  See  supra,  pp.  344,  n.,  345. 

March,  1857.— 29 


INDEX. 


The  pages  referred  to  are  those  between  brackets  [        ]. 


ACCOUNT, 

bill  in  equity  for  an,  4,  n.,  289,  304, 

n.,  398. 
with  a  banker,  135,  398. 
opening  an,  by  individual,  1. 
partners,  44-46,  182,  188,  583. 
corporation,  47. 
mining  adventurers,  311. 
trustees,  364. 
guarantee  of,  232. 
deposit,  what,  2,  6,  297. 
"for  account,"  163. 
"for  our  account,"  136. 
separate,  of  one  of  a  firm,  310,  311- 

313. 
running,  191,  282. 
general  balance  of,  190,  191,  207. 
ACCOUNTABLE  RECEIPT, 
what,  129. 
what  not,  135. 

cancelling,  131,  132,  511  and  n. 
liability  of  banker  on,  131,  133. 
infancy,  133. 
partnership,  134. 
alteration  of,  134. 
effect  of,  135,  304,  410. 
given  by  mistake,  411. 

banking  copartnership,  511. 
to  administrator,  511. 
change  of  firm,  304. 
given  on  payment  in,  of  bank  notes, 
410,  414. 
ACCOUNTANT  GENERAL, 
cheque  of,  44. 

cheques  in  hands  of,  91,  92. 
ACCOUNTS, 

taking  in  equity,  305,  306,  397,  n., 

398,  401. 
of  names  under  7  Geo.  IV.,  c.  46, 

460. 
settlement  of,  236. 
annual,  of  Savings'  Banks,  618. 


of  bank  notes,  440-415. 
when  evidence  for  banker,  607. 
publication  of  joint  stock  bank,  596. 
mixing,  347,  348,  352. 
ADVANCES, 

depositof  securities  against,  142, 164, 
178,  188,  191,  200,  205. 
In  Banking  Copartnership, 
by  manager,  514,  519. 
to  himself,  602,  605. 
when  provable  for,  523. 
what  not,  as  by  bankers,  302. 
by  way  of  credit,  547,  548. 
guarantee  of,  220-26,2. 
to  limited  amount,  227. 
In  Joint  Stock  Bank, 

to  directors,  313,  343,  598. 
to  consignee  of  goods,  212. 
by  executors  to  bank,  350. 
AGENT, 

overdrawing  account,  41. 

mixing  accounts,  347. 

cheque  of,  41,  79. 

banker,  when  is,  121,  176. 

notice  to,  184,  324. 

dealing  with  bank,  347. 

of  bank  suin#  member  of  more  firms 

than  one,  301. 
power  of,  sale   of  stock,  &c,  370, 

373. 
set-off,  334,  335. 
discounting,  394. 

indorsing,    &c,  bill,  personally  lia- 
ble, 205,  436. 
London,  437,  458. 
chairman,  when  is,  see  9  C.  B.  661. 
manager,  when  not,  519  and  n. 
director,  548. 

member  of  joint  stock  bank,  when 
not,  584. 
AGREEMENT, 
variance  in,  226. 


434 


I ;  B  A  N  I    ON    THE    L  A  W    0  F    J!  A  N  K  I  X  G. 


AGREEMENT,  continued. 

to  mortgage,  L83,199,200,  202,213. 

to  assign  shares,  --'>.  286. 
APPROPRIATION, 

of  payments,  27 --2-2. 

in  case  uf  new  firm,  :!05. 
by  guarantor,  &c,  '■'>-<'*. 
of  snares,  528. 
ARMY  AGENT,  314,  321. 
ARRANGEMENTS, 

among  shareholders,  508. 
ASSIGNEES, 

cheques  of,  41,  67. 

powers  of,  187,  322,  324,  329,  330, 

333,  330. 
account  with  bank,  326. 
mixing  accounts,  347. 
recovering  against  customer,  328. 
cannot  defeat  set-off,  318,  319. 
trover  against,  330. 
who  may  not  he,  378. 
in  case  of  equitable  mortgage,  192, 

193. 
test  of  right  to  sue,  218. 
ASSIGNMENT, 

of  debt,  179,  218,  219. 

notice  of,  179. 
of  stock  in  trade,  181  and  n.,  521. 
of  shares,  A'c.  ls5. 
to  creditors,  112  1.  325. 
of  lease,  L97  and  n. 
of  ship  ami  cargo,  212. 
of  Bhares  in  ship,  21  1.  n. 
of  all  estate,  &c,  421. 
ATTORNEY, 
cheques  of,  82. 
paying  in  client's  money,  348. 

to,  without  authority,  300. 
getting  in  assets,  &c,  348. 
notice  to,  209,  n. 
binding  company,  54s,  549. 
indorsing,  20."),  :;  I*. 
mixing  accounts,  348. 
liability  of,  232,  587. 
See  Warrant  of  Attorney. 

BALANCE, 

of  customer's  account,  190,  191. 

discharge  of,  225. 

transfer  of,  226. 

one  partner  drawing  out,  317. 

firm  Buing  for,  296,  n. 
BANKER, 

n  lations  of,  to  customer,  1,  3,  5. 
London    agent,   437.      See    Cor- 
respondent. 

not  truster-,  iii  general,  3. 

when  b  trustee,  4,  5. 

who  is,  as  to  issue  of  notes,  439,  n. 

agent,  when,  1.  1  12,  143. 

stakeholder, -118,  119. 


factor,  112. 

what  is  dealing  as  a,  2'.»7,  302. 

cheque  or  draft  on,  what,  12,  1G. 
refusing  to  cash  cheque,  &c,  27,  28, 
18,  19,  67,  :r27. 

pay  bills,  1 13. 
cancelling  cheque,  103. 

(Ih/i/  as  witness,  3,  n. 

stakeholder,  118,  119. 

as  t"  customer's  handwriting,  11, 

2.'.,  26. 
care,  4c,  63,  64,  65. 
paying  bills  payable   at  bank, 
110,  111,  113. 
cheques,  125. 

before  due,  6  I. 
orders,  Ac,  1 15-1 1  v. 
as  to  receiving  money  to  take  up 
bills,  110,  113. 
to  invest,  121. 
as  to  deposits  of  securities,  122. 
See  Securitu  s. 
knowing  of  act  of  bankruptcv, 

87,  88. 
act  of  bankruptcv  of  a  partner, 

401. 
acceptance  of  bills,  5,  6. 
caution  in  paying  bills,  Ac,  111. 

forged  bills,  111,  112. 
paying  to  executor,  133,  134. 
country    correspondents,     161, 

173,' 175. 
knowing  the  law,  Ac.,  325. 
to  whom,  "iilv  responsible,  7,  9,  10. 
not  obliged  t<i  stop  on  act  uf  bank- 
ruptcy of  partner.  401. 
bill  for  account  against,  4,  n.,  289, 
'    304,  n.,  398. 
payable  at  bank,  101-1 1  1. 
money  had,  Ac.,  by,  what  not,  3,  4, 

10. 
stopping   payment,    89.      See    Stop- 
ping Payment. 

Caution  a-  to  paying  bills,  111. 
orders,  &c,  115-118. 
Liability  <>t'. 
criminal,  1  M.  1  !■">.  1  18,  153,005. 
in  equity,  150,  351. 
for  acts 'of  partner,  292,  2'.U,  290. 
fraud  of  partner,  121,  122,  292, 
293. 

manager,  298. 

legal  remedy  retained,  117. 
directors  in  banking  copartnership, 

2. V.i. 
for   negligence,  239,    275,  n.,  238, 

2  11. 

of  clerk.  265,  266. 
on  purchase  of  annuity.  294. 

re-issued  notes,  299. 
for  pledging  short  bill,  310. 


I N  D  E  X. 


435 


BANKER,  continued. 

cashing  bankrupt's  cheques,  &c, 

326,  327. 
refusing  to  accept,  &c,  386. 
"  short  bills,"  what,  152. 
fraudulent  disposal  of  stock  by,  177, 

292,  296,  297. 
taking  equitable  mortgage,  180-197, 
199,  202. 

warrant  of  attorney,  206,  233. 
bond,  206,  207,  220. 
taking  promissory  note,  207,  216. 
plate,  210. 

goods  at  sea,  212,  213,  214,  216,  n. 
bill  of  sale,  212. 
mortgage  of  ship,  213. 
assignment  of  marine  insurance, 

214,  215. 
guarantee,  220-277. 
note  of  surety,  257. 
leasehold  title  deeds,  191,  192. 
customer's  accommodation  bill  as 

security,  331. 
money  to  meet  bill,  &c,  338. 
assigning  all  estate,  &c,  421. 
secret  arrangement  with   creditors, 

241. 
dealing  with  executor,  351. 
paying  without  notice  of  insolvency, 

325. 
accepting  bill  for  customer's  accom- 
modation, 331. 
course  of  business  of,  297,  302. 
goodwill  of  concern,  299. 
as  to  his  own  bank  notes,  405. 
absconding,  413. 

composition  with  creditors,  and  se- 
curity at  same  time,  243. 
compositions    as    to    Bank    notes, 

450. 
finding  surety,  275. 
giving  security,  205. 

on  issue  of  notes,  447. 
change  of  firm,  &c,  449. 
appropriating  payments,  278-282. 
rights  as  to  felon's  estate,  191,  192. 
sub-mortgagees,    &c,    193,   n., 

182. 
retaining  title  deeds,  201,  202. 
lien  of,  283-290. 
selling  property  in   case  of  a  run, 

&c,  315. 
security  for  general   balance,   190, 
191,  207. 

future  advances,  200,  204. 
See  Securities. 
in  partnership,  291-313. 
discharge  of  survivor,  190. 
security  to  new  firm,  191. 
acts  of  one  partner,  292,  294,  296, 
351,401. 


retiring,  304,  360. 
See  Partners. 
Bills  of  Exchange. 

payable  at  bank,  101-114. 
entering  "short,"  152. 
pledging  "short,"  316. 
specially  indorsed,  289,  n. 
paying  as  indorsors,  389. 
restrictive     indorsement,    390- 

394. 
proving  on  bills  paid  in,  325, 

326. 
refusing  to  pay,  113,  323,  326. 
proving  on  bills  discounted,  &c, 

327. 
taking  money  to  take  up,  110, 

caution  as  to  paying,  111. 
refusing  to  discount,  389. 
forged,  111,  112. 
accepting,  5,  6,  331. 
See  Bills  of  Exchange. 
negligence  of,  239,  275,  n.,  238,  244. 

clerk,  265,  266. 
libel  on,  303. 
his  notes,  407,  408. 
presentment  of,  412-414. 
licenses  to  issue  notes,  446. 
security  for  unstamped  issue,  447. 
bond  of,  449. 

no  new  bank  can  issue,  461. 
proving  in  bankruptcy  against  part- 
ner, 305. 
bankruptcy  of  bankers,  316. 

customer,  325,  327,  378,  384. 
cannot  re-issue  notes,  440. 
penalties,  444,  445. 
when  trader,  314. 
voting  in  choice  of  assignees,  379. 
suing  fiat  against  himself,  314. 
not  to  be  assignee  in  bankruptcy, 

378. 
absenting  from  bank,  315,  324. 
other  acts  of  bankruptcy,  315,  324,  n. 
absconding,  413. 
certificate,  315,  316,  370. 
liability  to  assignees  in  bankruptcy, 
323,  325,  331. 
trustees,  351. 
to  a  speculation,  308,  309. 

committee  of  management,  352. 
agents,  347. 

executors,  346,  351,  352. 
directors,  313,  343,  see  25  L.  J., 

Ch.,  601. 
commissioners,  340. 
receivers,  352. 

Savings'  Banks,  345,  620,  621. 
corporations,  346. 
firms,  188,  189,  306-313. 
assignees  of  bankrupt,  326,  327. 


436 


GRANT  ON  THE  LAW  OF  BANKING. 


BANKER,  continued 

Friendly  Societies,  321,  340,  620, 

nut.', 
army  agents,  321,  322. 
one  of  a  firm,  i  39. 

how  must  keep  books,  Ac.,  293,  330, 
546. 

invest  money  in  stock,  Ac, 
;;  ^9, 

cash  bills,  Ac,  :!7T.  i 
discount  bills,  Ac,  386,  n.,  and 
see  Discount. 

mav  applj  securities,  330. 
change  of  partnership,  449. 
Bolvenl  partner  paying  in,  402,  403. 
discharge  of  surviving  partner,  190. 
taking  accounts  of  a,  397. 
usage  of  Liverpool  bankers.  3 

London  bankers,  153,  266, 
note, 
assignment  of  all  estate,  &c.  of,  421. 
newty     established,     canuot     issue 

notes,  461. 
returns  to  be  made  by  every,  444, 

466,  485.     See  Returns. 
In  Copartnership  under  7  Geo.  TV. 
liability  of  members,  454,  455,  480, 

481,492,  n. 

criminally,  476. 
within    sixty-five    miles,    &c,    477, 

488; 
judgment  and  sci.  fa.,  478,479,  481, 

499. 
execution,  479,  480,  481. 
who  are  members,  483,  484. 
winding  up,  484. 
contributory,  492,  n.,  493,  n.,  see  25 

L.  J.,  Ch.649. 
keeping  share  register,  485,  n.,  494, 

note. 
not  to  notice  trusts,  492,  495. 
iutere-ts  of  shareholders,  496. 
property  in  laud,  496. 
sci.  fa.,  499. 
when  not  liable  for  debts,  505. 

and  re-issue  of  notes,  509.    See 

Bank  Notes. 
"borrowing,  owing,  Ac,"  139,  151, 

458,  159,  510. 
contracts  with,  511,  542, 
priority  of  leg  565. 

winding  up,  523,  613,  n. 
fiat,  524,  527,  613,  a. 
diii  25  -555. 

personal  liability  of,  535,  536. 

are  trustees.  5 13. 
retiring  from.  5  1 1.  ■•■<'. 
liabilities  of.  see  Shareholdt  rs,  II  </,</- 
,ir,  joint  Stock  Banks. 
BANKING      COPARTNERSHIPS. 
J 'a  liners. 


BANKING  HOURS,  49,  51,  106,  n., 

170.  171. 
payment  after.  '. 

courts  take  notice  of,  iu  London,  49. 
BANK  NOTES, 
defined,  439,  n.,  150. 
setting  off,  164,  336,  105. 
who  mav  issue,    138,   139,  406,  407, 

509. 
issue  of,  by  country  banks,  438. 
re-issue  of,  299,  509. 
form  of,  4i i7. 

exchanging  country  notes,  399,  416. 
compositions  as  to,  450. 
when  money,  404. 
tender  of.  405,  406,  407. 

representations  on,  432. 
bequest  of,  405,  406,  n. 
risk  on  receipt  of,  416. 
taking  in  execution,  406. 
in  alternative,  407. 
in  payment  of  antecedent  debt,  409. 
deposited,  414. 
payable  at  a  particular  place,  407. 

on  demand.  420. 
presentment  of,  407,  40*,  412-114. 
431. 

discharge  from,  413. 
how  to  be  paid,  407. 
insolvency  of  banker,  410. 
how  taken  in  payment,  Ac,  408,  410, 

412. 
paid  in,  before  notice  of  sto; 

317,  336. 
proving  on,  408,  n.,  317. 

signed  by  one  partner.  120. 
how  transferable,  409,  410,  111. 

to  pay  antecedent  debt,  409. 

returns  of  circulati f,  440. 

changing,  108,  110,  431,  n. 

exchanging,  416. 

buying,  409,411,  420. 

accountable  receipt  for,  410,  414. 

forged,  411,  422,   129. 

monthly  average  of,   142-444. 

quarterly  returns,  4  1 1. 

weekly  returns,  ill. 

Board  of  Inland  Revenue  to  examine, 

&c.,  4  11. 
banks  of  issue  of,  uniting,  4  15. 
stamped,  1 17. 
unstamped,  107,  4  18. 
unstamped,  security  for  issue.  1 17. 
accounts,  inspection  of,  by   Inland 

I;.    ■  mil-  Commissioners,  4  1 3. 
post  dating,  151. 
allowance  of  stamps  on,  452. 
notice  of  dishonour,  1 15. 
in  case  of  bankruptcy,  417,419-421. 
lost,  421-429. 
stopping,  424,  432. 


INDEX. 


437 


BANK  NOTES,  continued. 
stolen,  423,  424,  427,  428. 
stale  and  cancelled,  431,  432. 
forged,  429,  431. 
false  pretences  as  to,  432. 
no  new  bank  can  issue,  461. 
bankruptcy,  as  to,  417,  419. 
BANK  OF  ENGLAND, 

cheque  on,  how  payable,  22,  23. 

forms  of,  81. 
refuse  to  pay  what  cheques,  70,  n. 
cheques  of,  81. 

notice  of  act  of  bankruptcy  to,  88, 
438. 

to  branch  bank,  433. 
when  compellable  to  reinvest  stock, 

125,  358. 
duty  as  to  keeping  account  of  stock, 

126. 
transfer  of  stock,  360,  362,  367,  371, 

373. 
payment  of  dividends,  363,  365. 
charity  trusts,  372. 
corporations,  373,  374. 
power  of  attorney  to  transfer,  &c, 

358,  362. 
cestui  que  trust,  375. 
deposits  with,  377,  378. 
discounting,  380. 
stock  of,  353,  375,  376. 
bookkeepers  of  public  stocks,  354- 

357. 
not  trustees  thereof,  364. 
unclaimed  dividends,  374. 
their  books,  354,  359,  371,  n.,  432. 
dividend  warrants,  355,  361-363. 
rights  within  sixty-five  miles  of  Lon- 
don, 457,  440,  477. 
bank  notes  of,  357,  405,  406. 

unstamped,  406. 

bequeathing,  405. 

as  clioses  in  action,  405. 

tendering,  406. 

taking  in  execution,  406. 

following  lost,  423. 
stamps,  377,  406. 
stopping  notes,  423,  424,  432,  n. 
relieved  from  registering  wills,  &c, 

360. 
does  not  notice  trusts,  363,  364,  365. 
judicial  notice  of,  406,  n. 
practice  of,  360. 

rule  of,  as  to  joint  owners  of  stock, 
364,  369,  370. 
as  to  proving  deeds  of,  433. 
entry  in  books  of,  356,  n.,  432,  n. 
forged  power  of  attorney,  373. 
proving  in  bankruptcy,  377,  378. 
BANK  POST  BILL, 
payment  by,  38. 
form  of,  432,  n. 


nature  of,  169,  n. 
lien  as  to,  1  lis. 
describing,  357. 
stamps,  377. 
cashing,  t.'.'J. 
issued  in  London,  433,  n. 
payable  at  branch  banks,  458,  n. 
remitting,  168. 
accepted,  432. 
BANKRUPTCY, 
of  drawer  of  cheque,  67. 
officer  of  Savings'  Bank,  &c,   620, 

621. 
petitioning  creditors'  debt,  83. 
cheque,  when  act  of,  84. 
fraudulent  preference,  85,  86,   87, 

209,  211,  321,  322,  402,  see  25  L. 

J.,  Bank,  60. 
notice  of  act  of,  88,  326,  433. 
nature  of  act  of,  315. 
of  some  members  of  firm,  131,  132, 

310. 
of  London  correspondent,  161,  162. 
reputed   ownership,  169,  180,   181, 

185,  211,  n.  353. 
recovery  of  deposit  from  assignees, 
170,  171. 

Insurance  Company,  182. 
what  not  act  of,  181,  324,  n. 

is  "in  order  and  disposition,'' 

169,  182,  185,   188,  194,  n., 

206,  330,  see  25  L.  J.,  Bank, 

53. 

in  case  of  equitable  mortgage,  192. 

assignment  of  debt,  179,  218,  183, 

note, 
banker   proving    against   surviving 

partner,  191,  305. 
one  partner  contributes  more  than 

his  share,  291. 
retiring  partner,  307. 
contingent  liability,  262. 
priority  of  bank  in,  191.     See   Cre- 
ditors. 
bankers  made  traders  as  to,  314,  613, 

note. 
banker  suing  fiat  against  himself, 

314,  315. 
of  bankers,  314-323,  327,  417,  521. 

customers,  323-339. 

holder  of  bank  stock,  376,  n. 
shares,  521,  314. 
bank  of  England  proving  in,  37^'. 
proving  on  banker's  notes,  379,  408, 
n.,  419. 
bills  paid  in,  325. 

discounted,  327,  384. 
a  payment  protected  by  the  Statute 

of,  433. 
set-off  in  respect  of  notes,  318,  319, 

419. 


QBANI  ON  THE  LAW  OF  BANKING. 


BANKRUPTCY,  continued. 

bills  of  bankrupt,  323. 
protection  in,  315. 

3  and  note,  370. 
notice  of  act  of,  121. 
banking  copartnership]  proving  in. 
467,  469. 
suing  //<(/.  168. 
winding  an,  til 3,  n. 
member  of,  liable  in,  314. 
of  public  officer,  17  1. 
of  company,    customers    of   bank, 

302. 
shares,  as  to,  491,  n.,  404.  406,  521, 

588. 
commissioners,  &c,  proving,  342. 
member  of  company,  506. 
trader  debtor  summons,  507,  see  613, 

note, 
assignment  of  all  effects,  &c,  181, 

521. 
delaying  creditors,  521,  522. 

two  firms,  &c,  522. 
fiat  against  bankers,  524. 
contrasted  with  winding  up,  549-551, 

613,  n. 
as  to  joint  stock  banks,  599,  613,  n. 
priority  of  Friendly  Societies,  321, 

620.  n. 
Priority  of  Savings'  Bank,  620,  621. 

mortgagee,  201,  215. 
refusal  of  certificate,  315,  316,  and 
n.,  370. 
BANE!  STOCK,  353,  375,  376. 
"participation,"  376. 
bequest  of,  354,  a.,  376,  n.,  377. 
owner  of,  376,  a. 
charging,  486,  n. 
trustees,  investing  in,  375. 
bonus,  37-").  376. 
BILL  OF  SALE, 

when  should  be  taken,  212. 
nling,  594 
lien  as  to,  32.",. 
BILLS  OF  LWCIIAX.iK, 

able  at    bankers,  104,  176,  323, 
377,  378. 
how  accepted,  105. 
declared  on,  105,  n. 
notice  of  dishonour  of,  105,  o., 

L06. 
lose  of,  L76. 
indorsed  to  bankers,  106,  310,  330. 

dally,  289,  a.,  137. 
agent,  personally  liable,  when,  436. 
paving,  as  indorsers,  389. 
"orders  not  to  pay,"  107. 
presentment,  106,  n.,  108,  109. 
attestation  of,  107,  1 13. 
acceptance  <•('.  108,  109,  110. 
bom  to  be  paid,  109. 


when,  110,  111. 
paymenl  by  stranger,  111. 
refusal  to  pay,  1 13,  323. 
forged,  109,  111. 

indorsed  by  London  agent,  in  ex- 
change, iVc,  330. 

procuration,  516. 
protested,  112. 
cancelled  by  mistake,  107,  112. 

refusal  to  take.  113,  114. 

remittance  of,  L39,  L54,  173-175. 
for  sale,  155,  204. 
indorsed  bills,  154. 
trover  for,agains1  assignees  of  bank- 
ers, 141,  112,  159. 
entering  as  cash,  141  and  n.,  143. 
usage  of  Lancashire,  as  to,  141,  1  12. 

L50'. 
when   "in   order   and   disposition," 

142,  206,  330. 
entering  short,  152.  154,  155,  330. 
pledging  short  bills,  316,  n. 
foreign,  435. 
undue,  property  in,  143,  144. 

transfer  of,  144. 
disposal  of,  151. 

depositing  indorsed,  153,   154,  161. 
164,  170,  203,  n.,  289. 
by  one  not  a  customer,  160,  165. 
country  bank,  163. 
"short  bills,"  330,  152. 

presumption,  as  to,  153,  n. 
not  passing  to   assignees,  169-172, 

330. 
lien  on,  288,  289,  251. 
handed  in,  as  to  proof  in  bankruptcy 

on,  325. 
of  a  partnership,  300,  310. 
one  partner,  308,  310. 
accommodation,  163,  164,  318-321, 

329,  331,  389. 
attorney  indorsing,  348. 
discounting,  2Ss,  :js0-:;ss. 
rediscounting,  389. 
pledging,  203,  n. 

restrictive  indorsement  of,  390-394. 
at  sis  months'  date,  457. 
less  date,  459. 
longer  date,  159. 
manager  indorsing,  515. 

retiring,  388. 
directors  accepting,  Ac,  554,  593. 
BILLS  OF  LADING,  212,  213,  21 1. 
215. 
di  posit  of,  100. 
BOND, 
irregular  disposal  of,  148,  297. 
to  replace  stock,  357,  n. 
deposited  as  security,  177,  206,  207. 
i/ir,  n  in  bankers,  220. 
change  of  firm,  221. 


INDEX. 


439 


BOND,  continued. 

joint   and   several,   221,   n.,  22G, 
229,  236,  240,  259. 
construction  of,  22(3. 
merger,  221,  n.,  229. 
joint  and  several,  229,  236,  240,  241, 

275. 
counter  bond,  240. 
time  given  to  principal,  230. 
for  fidelity  of  clerk,  266. 
paying  off,  282. 
proving  in  case  of,  328. 
payable  by  instalments,  328. 
given   by   bankers,  to   pay  stamps, 

510. 
BOOKS, 

bankers,  bow  to  keep,  330,  331,  546. 
as  to  private,  293. 
of  Bank  of  England,  354,  356,  n. 
examination  of,  by  Inland  Revenue, 

&c,  444. 
register   of  banking  copartnership, 

464,  473,  485,  m,  497. 
shareholder  not  bound  by,  547. 
counter,  171. 
entry  of  probate,  589. 

by  clerks  in,  266,  267. 
register  of  joint  stock  banks,  592. 
BRANCH  BANKS,  317. 
paying  notes  into,  &c,  317. 
promissory  note  made  at,  516. 
.  managers  of,  298,  514-520,  522,  602- 

605. 
bank  post  bill,  433. 
each  separate,  520. 
BRISTOL,  usage  of  bankers  of,  288,  n. 

CALLS, 

In  Banking  Copartnership, 

as  to  proving  for,  326. 

covenant  to  pay,  472. 

suing  for,  478. 

liability  of  legatee  for,  488,  493. 

unpaid,  572. 

paying  on  shares  deposited,  189. 
In  Joint  Stock  Bank, 
how  made,  591. 

refusal  to  pay,  582. 

interest  on,  592,  n. 

action  for,  592,  n. 

evidence  of  payment  of,  607. 

paying  on  shares  deposited,  189. 
CANCELLING, 

cheques,  59-61,  65,  G6,  80,  103. 
by  mistake,  65,  112. 
bills  remitted,  175. 
bank  note,  432. 
CAPITAL, 

of  banking  copartnership,  485. 

paid  up,  537. 
of  joint  stock  bank,  584. 


of  outgoing  partner,  300. 
representations  as  to,  585. 
CASH,  405,  n.,  406. 

evidence  of  receipt  of.  Ill,  414. 
CASH  CREDIT,  what,  20. 
CASHIER,  269,  270,  462,  n.,  509. 

false  entries  by,  269. 
CERTIFICATE.     Sec  llonhruptcy. 
CHEQUE,  nature  of,  12,  13. 

form,  12,  15,  19,  23,  24,  81,  341,  n. 

its  address,  13. 

date,  13-20. 

place,  14,  15, 17. 

exemptions  from  stamp,  14,  n.,  16, 

19. 
when  not  payment,  15. 
unstamped,  1  li. 
post  dated,  17,  18  and  n.,  20,  28,  n. 

issuing,  18. 

within  what  distance,  &c,  17. 
penalty  for  cashing  void  cheque,  18, 

19,  39,  64. 
usage  as  to  paying,  19,  n. 
void,  19,  20,  21. 
how  payable,  19  and  n.,  21,  22,  23, 

29,  30,  33,  34,  35,  65. 
sum  drawn  for,  20,  23. 

in  body  of,  24,  25. 

alteration  of,  25,  26. 
lost,  26,  62,  64. 

payable   to   order   on  demand,   27, 
29. 

on  demand,  39,  65. 
indorsed,  27,  28,  29. 
when  drawer  has  no  funds,  27. 
equity  of  bearer  of,  27. 
payee  v.  drawer,  30  and  n. 
holder  v.  drawer,  30,  31,  32  and  n. 
payment  by  Bank  of  England  note  a 
33,  34. 

country  bank   notes,  29,  34,  35, 
36,  n. 

base  coin,  35,  36. 

bill  of  exchange,  36,  37. 

another  cheque,  38. 

bank  post  bill,  38. 

to  bearer,  &c,  34,  38,  39. 
signature  of,  39,  40. 

marksman,  40. 

infant,  40. 

executors,  &c,  40. 

assignees,  41. 

agent,  41. 

trustees,  41,  42. 

several  jointly,  41,  42. 

receiver,  43. 

Accountant-General,  44. 

partners,  44,  45,  46. 

directors,  47,  48. 

in  cases  of  winding-up,  44. 
of  corporation,  47,  48. 


440 


GRANT  ON  THE  LAW  OF  BANKING. 


CHEQUES,  eotiHrn 

Bank  of  England,  -1. 
refusal  to  pay.'  18,  49,  66,  67. 
presenting  for  payment,  49,  50,  51, 
52,  3  I.  56,  66. 

dispensation  with,  (!G. 
deatli  of  drawer,  50,  n. 
discounting,  56. 
changing,  56,  57. 
presentment  where,  57. 

when,  51,  52,  5  I. 

through  clearinghouse,  57,58,59. 
bankers,  51 .  52. 
cancelling,  59,  60,  61,  65,  83,  103. 
stale.  50.  52,  62,  63. 
marking,  59. 

no  days  of  grace  for,  65,  95,  n. 
drawn  by  treasury,  65. 
retaining,  65,  7."',  76, 8 1. 
payee  V.  drawer,  50,  5o,  66. 
crossed,  68-74, 
cashed,  71.  75. 
"  returned,"  (,C>,  75-78. 
whose  property,  when  paid,  75,  77. 
as  payment,  78,  92. 
evidence,  78,  80-88. 
form  of,  in  case  of  change  of  firm, 

81,  295. 
not  money,  81,  90,  93. 
nor  goods,  90. 

given  for  deposit  on  sale,  83. 
petitioning  creditor's  debt,  83. 

as  act  of  bankruptcy.  8  1. 
operation  of,  in  insolvency,  85,  86. 
cashing,  with  knowledge  of  acts  of 

bankruptcy,  >s7,  88. 
in  case  of  bank  stopping,  &c,  89. 
when  considered  as  cash,  90,  93,  94. 
seizable  under  fi.  fa.,  91. 

in   hands  of  accountant-general, 
91,  92. 
not  donatio  mortis  causa,  93. 
debiting  with,  9  L 
dishonoured,  94,  327. 
mi!  bill  of  exchange,  94,  95,  96. 
when,  is  due,  97. 
stamps  on,  97-99. 
crimes  as  to,  99-102. 

false  pretences,  99,  100. 

stealing,  100. 

forgery,  L01,  102. 

iption  of)  in  indictment,  101. 
as  a  will,  L02. 
on  bills  deposited,  142. 
fraudulenl . 

ruder  in  which  to  l"'  eashed,  279. 
proving  for  amount  of,  326. 
of  trustees,  36  1. 

direct- ,!■-.  55  I. 

RING  HOU8] 
CLERGYMAN,  478. 


CLERK, 

guarantee  for  conduct  of,  262-27  7. 

absconding,  174,  298. 

course  of  employment,  265,  266. 

negligence  of,  265,  266,  207. 

embezzlement  by,  267. 
COLLUSION, 

of  one  of  banking,  with  one  of  cus- 
tomer's, firm,  292. 

between  bank  and  a  creditor,  497, 
498. 
COLONIAL  BANKS, 

promissory  mites  of,  538. 

winding  up,  609-613. 

bankruptcy,  609. 

assignment  of  effects,  Ac,  609. 

plea  of  colonial  judgment,  Ac.  610,n. 
COMMISSION, 

banker's  claim  to,  327, 328,  387, 395, 
396,  398. 
on  purchase  of  stock,  438. 
COMMISSlONERSof  enclosures,  &c, 

340-350. 
COMPOSITIONS.     See  Creditors. 

as  to  bank  notes,  450. 

of  felonv,  268. 
COMPROMISES, 

whether  effectual  to  relieve  share- 
holders. 508,  509. 
CONSIDERATION.     See   Gua- 
ranty. 

for  bank  notes,  409. 
CONSIGNEE,  of  goods,  advances  to, 

212. 
CONSPIRACY, 

bankers,  when  indictable  for,  122, 
128,  l  I-. 

directors,  when,  552. 
CONTRACT, 

for  sale,  Ac,  of  stock,  371. 

with    banking    copartnership,    457, 
458. 
CONTRIBUTORY.      See    Winding 

hji,  Shan  hold  rs, 
COPARTNERSIP, 

banking,  453-578. 

See    1'nrlin  T8. 

CORPORATION, 

opening  account  with  bank,  47. 

cheque  of,  17. 

acts  of  agent  of,  573. 
CORRESPONDENT, 

relation  to    hanker,    173,    225,   322, 
330,  137. 
of  town,  8,  9,  161,  400. 
COSTS, 
as  to  equitable  mortgage,  192,  193, 
L95,  L98. 
transfer  of  stock,  360,  n.,  367,  u. 

unclaimed  dividends,  374,  n. 
giveu  to  administrator,  511. 


INDEX. 


441 


COSTS,  continued. 

application  for  interpleader,  Is7. 

of  order  of  sale  of  mortgage,  &c, 
193. 
motion  to  stay,  &c.,  550. 
COUNTRY  BANKER, 
relation  of,  to  town  correspondent, 
8,  9,  161,  400.- 

other  country  banks,  399. 
presenting  cheques  on,  53,  54,55,  56. 
depositing  bills,  153,  161. 
remitting  bills,  161. 
proving  for  interest,  &c.,  327,  328. 
bank  notes,  remittances,  &c,  399. 

452. 
Loudon  agent,  437. 

bankruptcy  of,  162. 
Statute  of  Limitations,  600. 
issue  of  notes  by,  438-451. 
Bank  Charter  Act,  439. 
return  of  names   of  partners,  &c, 

444. 
alteration  of  partnership,  449. 
customer    of,    in    case   of  London 

agent's  bankruptcy,  162. 
receiving  deposit  on  eve  of  stoppage, 

170. 
COVENANT, 
joint  and  several,  262. 
a  contingent  liability  in  bankruptcy, 

262. 
trustees  suing  on,  472. 
with  directors,  528. 
of  surety,  225,  231. 

to  pay  floating  balances,  228. 
CREDITORS, 

deed  of  composition  with,  235,  243- 
250. 

guarantee  by  trustees  under,  248. 
fraud  of,  243. 
•  joining  in  deed  releases  guarantor, 
244. 

where  not,  245,  246,  251. 
receiving  dividends,  &c,  317,  318. 

securities,  330. 
in  case  of  guarantee,  228. 
of  copartnerships,  &c,  501. 
compromises  with,  508. 
priority  of  bankers  over,  191,  201, 
215,  288. 

Friendly  Societies,  &c,  over,  620, 
621,  n. 
deed  of  composition  with,  how  far 

binds    partners,   &c.,    294,    295. 

See  Partners. 
separate,  of  deceased  partner,  305. 
as  to  winding  up,  &c,  572,  574. 
option  of,  as  to  replacement  of  stock, 

&c,  296,  297. 
bankers'  claim  as,   under  adminis- 
tration summons,  350,  n. 


relief  of,  against  fictitious  trail 

&c,  371. 
when  to  bear  loss  on  remittance,  -l: 36, 

437. 

by  specialty,  483,  484. 
advance  to,  affecting  guarantee,  242. 
secret  arrangement  frith,  242. 
covenant  in,  not  to  sue,  how  it  affeci  - 
guarantee,  215. 
CROSSING;  CHEQUES,  68-74. 
CUSTOMER, 

relations  of,  to  banker,  1,  3,  5,  315, 

316,  and  sec  Srciirides. 
how  opens  account,  1. 
when  also  a  partner,  299. 
his  orders,  3,  4,  6,  11. 
when  to  be  debited  with  cheque,  94. 
guarantee  of  advances  to,  221. 
appropriation  of  payments  of,  280, 

281. 
depositing  accommodation  bills,  331. 
continuing  account  with  bank,  280, 

281. 
relations  to  his  banker's  correspond- 
ents, 173. 
suing  banker,  298. 
depositing   deeds   of  third   person, 

200. 
assent  of,  to  transfer  credit,  &c,  305. 
bankruptcy  of  guaranteed,  227,  Tl  8. 
releasing  retiring  partner,  305. 
firm,  as  a,  306. 

rights  of,  in  case  of  branch  bank, 
317. 
sale  of  his  stock,  292. 
bankruptcy,  162,  314-339. 
payment    by   solvent    partner, 

401. 
discounts,  &c,  382-385. 
against  manager,  518. 
change  of  firm,  191,221,  306,  583. 
felony  of  a,  191,  192. 

DEBENTURES,  169. 

sale  of,  539. 
DEBT,  assignment  of,  179. 
DECREE,  against  public  officer,  478, 

481. 
DEED  OF  SETTLEMENT, 

Of   Banking    Copartnership,   474, 
483. 
executing,  483,  541. 
construction  of  terms,  &c,  486,  489, 

492,  494,  497,  499,  525,  n.,  570. 
buying  out  members,  512,  513. 
directors  as  to,  286, 525,  and  n.,  530- 

555. 
of  Bank  of  Australia,  538,  541,  n., 
see  25  L.  J.,  Ch.,  649. 
North  of  England  Banking  Com- 
pany, 563,  et  seq. 


m 


I I  B  A  N  I    OS    THE    LAW    OF    B  A  NKING. 


DEED    OF    SETTLEMENT,    eon- 
tin  a  i  >/. 
Of  Joint-stock  Bank,  579. 

iting,  579. 
provisions  of,  as  to  lien,  286,  287. 

iS]  r. 

of  deeds,  Ac.,  for  Bafe  custody,  204. 
of  chest  of  heir  looms,  284 

>f  g Is,  1 7v. 

of  bills  of  exchange,  clothed  with  a 

trust.  170. 
accepted  for  accommodation  of 
depositor,  331,  332. 
by  one  of  a  firm,  1 B8,  189. 

securities.    See  Securities. 

copy  of  court  roll,  203,  n. 

money,  170.  172,  338. 

bills  of  lading,  190. 

shares,  188. 

warrant  of  attorney,  206. 

dock  warrants,  190. 
account,  what,  2,  6,  2'.'7. 

of  several,  jointly,  41. 
receipt,  136. 

cancelling,  137. 
memorandum  of,  1*2,  n.,  192,  193, 

L94,  195,  199,  200. 
unwritten.  L94. 
fresh,  when  needful,  217. 
DIRECTORS, 
In  Banking  Copartnerships. 
one  of  a  company,  member  also  of 

bank.  313. 
banker  dealing  with,  313,  343,  see 

25  L.  J.,  Ch.,  601. 
blank  cheques  of,  55  I. 
consent  of,  to  transfer,  &c,  286,497, 

498,  545. 
not  to  be  sold.  544,  558. 
contracts  with.  511,  542,  555. 

.  lect  of  duties,  56  I. 
buying  out  shareholders,  512. 
binding  them,  .".:;<,  539,  541. 
relations  to  manager,  51  1.  602-605. 
liabilities  of,  525-555,  601,  605. 

f towers  of, '-'-,;.  52fi  and  a.,  555,  604. 
ien  of,  on  -hare-.  I94j  495. 

313,543,  604,  605. 
granting  credit-,  .".  17.  5  18. 

how  to  seep  l ks,  :>  16. 

altering  objects  of  copartnership,  526, 
527.  ' 
discounting,  526. 
••  Bending  up  slum-."  528,  5  17. 
:i j .] .I \  i  1 1  lT    moneys     in    speculations, 

...  tO  do  fraud,  ."-1-. 

representations  of,   .">.;.">.    537,   5 1", 

552,  558,  585. 
bankruptcy  of,  6  19. 
irregular  transactions  of,  534,  645. 


accepting  bills,  554,  555. 

interests  of,  536. 

drawing    joint    and    several     note, 

554 
managing,  603. 
paying  dividends,  552. 
Of  Joint-stock  Jinn/:, 

election,  579,  593. 

re-election,  592. 

powers,  585,  586,  591,  593,  599,  n., 
604. 

as  to  shares.  591,  592,  and  u. 
qualification,  593. 
cannot  allow  members  to  withdraw, 

586. 
service  of  notice  on,  593. 
dividends.  59  I.  595. 

liabilities,  593,  595,  601,  605. 
binding  themselves,  Ac.,  597. 
not  to  disputes,  Sue 
advances  to,  313,  598. 
contracts  of,  599. 
taking  securities,  593,  594. 
service  of  notices  on,  593. 
cannot  divert  funds  of  company,  597. 
DlSt'olXT, 

when  a  purchase,  308,  381,  385,  n. 
loan,  337,  385,  and  n. 
safe,  380,  382. 
as  to  interest,  327,  328,  386,  387. 
negligence,  382. 
evidence,  382,  n. 
presumption  tor  hankers,  382. 
of  bills  remitted  for,  386. 

drawn  bv  one  partner,  &c,  '•||~. 

deposited,  153,288. 

for  accommodation  of  customer, 

389. 
forged,  112,  411. 
navy  lulls.  411. 
in    case    of   partners    in    several 
linns,  301,  307. 
one  of  a  firm,  213. 

death  of  drawee,  390. 
commission  on.  .".!»7.  39S. 
of  promissory  note,  289. 
permission  to.  154. 
refusal  to.  389. 
bills  discounted  pass  to,  &c,  330,  see 

337. 
re-discounts,  387,  a.  389. 
DIVIDEND  WARRANTS,  355,  361. 

form  of.  361,  n. 
DIVIDENDS, 
in  bankruptcy,  refunding,  326,  332. 
of  stuck.  364,  356,  363,  367. 
warrants.  36  1 . 

unclaimed,  374,  375. 
orders  to  pay  over.  37C. 
action  for.  376,  a. 

in  Joint-stock  bank,  594. 


INDEX. 


U3 


DIVIDENDS,  continued. 

on  shares,  1. 

wife  suing  for,  493. 

lien  on,  495. 
how  to  be  paid,  552. 
DOCK  WARRANTS,  190. 
DRAFT.     See  Cheque. 

EAST  INDIA  BILLS,  166,  207,  383. 
ELEGIT,  201. 
EMBEZZLEMENT, 

banker  when  liable  for,  144,  267. 
clerk,  267-270. 
shareholders,  602. 
officer  of  savings  bank,  621. 
Banking  Company,  602. 
"ENTERING  BILLS  SHORT,"  152, 

154. 
EVIDENCE, 

cheques  as,  78-88. 
unstamped,  16. 
books  of  banker  as,  143,  330,  331, 
155. 
Bank  of  England,  354,  359,  371,  n. 
accounts  of  banker  as,  607. 
indorsement  as,  154,  382. 
entering  bills  short  as,  154,  155. 
of  knowledge   of   change   of  firm, 
130,  n. 

acts,  &c,  by  deceased  partner, 

296. 
irregular    disposal    of    bonds, 

149. 
negligence  in  clerk,  266,  277. 
terms  of  a  deposit,  404. 
change   of  firm,  &c,   303,  n., 

306,  and  n. 
assent  of  customer  to  transfer 

credit,  &c,  305. 
authority  to  borrow,  311,  n. 

issue  notes,  430. 
dishonest    dealings,    &c,    315, 
316. 
of  knowledge  of  intent  to  defraud, 
Ac,  357,  358. 

discount,  382,  n. 
transfer   of   stock,    359,    373, 
and  n. 

credit   to   new  firm,    305, 
306. 
fraudulent  preference,  403. 
execution   of    deed,    &c,    295, 

and  n. 
authority  to  issue  notes,  430. 
of  receipt  of  cash,  411. 
person  being  public  officer,  462, 
and  n.,  463,  469. 

member  of  co-partnership, 

466. 
proprietor,  &c,  463,  497. 
director,  525,  n. 


partnership  account,  311,  31  2. 
books  of  company,  473,  4!t  I.  n., 

547. 
diligence,  Ac,  in  sci.fa.,  501,  a. 
manager,  517. 
receipt,  589. 

return  of  names,  &c,  461,  162, 
464. 
on  promissory  note,  403,  404. 

guarantee,  277. 
presumption  for  bankers,  382. 
as  to  short  bills,  153,  n. 
as  to  privity,  &c,  296. 
chauge  of  firm,  306,  n. 
to  identify,  &c,  494,  n.,  57  1,  576. 
effect  in,  of  returns,  466. 
by  public  officer,  462,  472,  473. 

cashier,  608. 
effect  of  pass  book  as,  46,  525,  n., 
605-608. 

acquiescence  in  entries,  «fcc, 
606. 
what  not,  of  payment  by  notes,  &c, 

608. 
certificate  of  savings'  banks,  620. 
EXCHANGE, 

of  bills  of  exchange  for  bill  upon 

London,  170. 
of  country  bank  notes,  416,  418. 
EXCHEQUER  BILLS, 
deposit  of,  203. 
lien  on,  289. 
sale  of,  296,  297. 
EXECUTION, 

against  public  officer,  483. 
executor,  492. 

members  of  company,  479-481. 
existing  members,  &c,  501. 
within  three  years,  &c,  455,  456.' 
notice  of,  591. 

in  case  of  collusive  judgment,  498. 
EXECUTORS,  &c, 
cheques  by,  40. 
notice  to,  179,  180,  209,  573. 
of  deceased  partner,  305-310,  312. 

guarantor,  274,  275. 
one  dealing  with  other,  352. 
dealing  with  banks,  346,  347,  350, 
351. 
Joint  Stock  Banks,  589. 
mixing  accounts,  347,  348,  352. 
advancing  trust   funds  to  bankers, 

350. 
transferring  stock,  360. 

to  credit,  &c,  to  evade legaevdutv. 
134. 
as  to  shares,  484,  488,  491. 
investing  through  country  bankers, 

349. 
execution  against,  492,  493. 
Sci.  fa.  against,  483. 


444 


GRANT  OX  THE  LAW  OF  BANKING. 


EXECUTORS,  continued. 

clerical,  198. 

when  released,  535. 
contributory,  563,  564,  567. 

costs  of  transfer  of  stock,  360,  n. 

death  of,  180,  n. 
EXEMPTION, 

from  liability,  <>f  members. 

of  copartnership,  51 
EXTENT,  201,  and  2  Exch.  299. 

parcel  of  bills  sealed  but  not  deli- 
vered, liable  to,  437. 

FACTOR,  155,  156. 
FELONY. 

of  customer,  &c,  191,  192. 
clerk,  <fcc,  268. 
FIRE,    policy   of  insurance   against, 

181. 
FI I :  M,  change  of,  222.     See  Partners. 
FIXTURES,  equitable  mortgage  of, 

192,  ii..  195. 
FORGERY, 

of  Bank  of  England,  &c,  notes,  357, 
429. 
power  of  attorney  to  sell  out,  &c, 

292. 
country  bank  notes,  411,  429. 
loss  of  document,  422. 
order  for  payment  of  money,  &c, 

430. 
banking  copartnership  notes,  468, 
476,  510,  n. 
cheque,  55  1. 
description  of  bills  of  exchange, 
.',17. 

lence  of  intent,  &c,  357. 
non-complicity,  373,  n. 
FRAUD, 

of  one  partner  unknown  to  others, 

in  selling  stock,  296. 
in  case  of  copartnerships,  476. 
bankruptcy,  1  B5. 
judgment  against,  504. 
■  i  guarantee,  233,  n. 
of  manager,  267,  298,  518,  519, 

548. 
directors,  537,  548,  552. 
FRIENDLY  SOCIETIES, 
bankers  dealing  with,  321,340,343, 
344. 

>D8, 
deposit  of,  17-,  210,  211. 
clothed  with  trust.  215. 
GUARANTEE. 
To  bankers  before  1856. 
mder  seal,  252-255. 

leration  must   appear,  255, 
274. 


where  ambiguous,  253. 

promissory  note  as,  may  require  an 

agreement  stamp,  256. 
for  past  advances,  254,  259. 
Sina  1856, 
consideration  need  not  appear,  255, 

274 
misrepresentation  as  to,  217. 
release  of  one,  no  release  of  surety, 

241. 
fraud  in  getting,  242. 
filing  bill,  243. 
forbearance,  246. 
For  Advances,  220-202. 
change  of  firm,  221,  222,  223,  225. 
form  of,  223,  232. 
construction  of,  224. 
limited,  226-228,  233,  235. 
varying,  226,  271,  and  n. 
continuing,  221.  222,  227,  259,  260. 
revocation,  227,  n. 
balance  in  favour  of  customer,  260, 

261. 
counter  indemnity,  237,  n. 
merger,  229,  230. 
time  given  to  principal,  230,  243, 

257. 
on  behalf  of  firm,  223. 
impeaching,  233,  n. 
how  to  be  taken,  233,  238,  273. 
release  of,  231,  235,  239. 
by  deed,  245. 

promissory  note,  235,  256. 
reserve  of  remedies,  242,  245,  247, 

252.  _ 
past  advances,  249. 
knowledge    of   act   of  bankruptcy, 

250. 
trust,  250. 
set-off,  251. 

personal,  of  directors,  313. 
proving  on, in  bankruptcy,  326,  327. 
/•'<//■  Conduct  of  Clerks,  &c. 
discharges  of,  221,  244,  262,  263, 

264,  266,270-272. 
change  of  firm,  272,  273. 

duties,  265. 

salary,  272. 
executor  of  guarantor,  274. 
composition  of  felony,  268. 

ion  to  account,  269,  270. 
notice  to  guarantor,  271. 

waiver  of,  is  for  jury.  27  1. 
contract  of  guarantor,  271. 

varied,  271,  272. 

plea  on,  271.  n, 
'•to  the  house,"  273. 
how  to  take,  27::.  27  1. 
application  of  payment,  &c,  by  clerk, 

277. 

Qiv(  a  by  Bankers, 


INDEX. 


445 


GUARANTEE,  continued. 
as  treasurers,  &c,  275,  276. 

HEIR  LOOMS, 

deposit  of  chest  of,  284. 
inspection  of,  284,  n. 

INFANT, 

accountable  receipt  to,  133. 
See  Shares. 
INSOLVENCY, 

operation  of  cheque,  85,  86. 

payments  without  notice  of,  325. 

equitable  mortgage,  198,  n.  (p),  218. 

provisional  assignee  in,  187,  219. 

in  India,  208,  333. 

misdescription  in  schedule,  339. 

of  banking  copartnership,  471,  507, 
527. 
INSPECTORSHIP,  deed  of,  295. 
INSURANCE, 

deposit  of  policy  of,  179,  181,  182, 
185. 

notice  of  deposit,  180,  182, 183, 184, 
185,  186,  219. 

mortgagee  of,  179,  182. 

sub-mortgagees,  182. 

assignment,  184. 

fire,  181. 

marine,  181,  213,  214,  215. 

assignment  of  policy  of,  218. 
debts,  179. 

indorsement  of  policy,  215. 

amount  of  debt  secured,  218. 
INTEREST, 

contract  to  pay  on  deposits,  3,  n. 

on  rests,  &c.  397. 

securities,  216,  217. 

usage  to  charge  on  advances,  3,  n. 

rebate  of,  386. 

when  to  be  paid  on  deposits,  129. 
proved  for,  327,  328. 
calculated  on  separate  items,  &c, 
304. 

usage  of  Liverpool  as  to,  397,  607. 

on  calls  unpaid,  592,  n. 

assignees  recovering,  328. 

compound,  in  savings'  banks,  614. 
INTERPLEADER,  137,  187,  219. 

JOINT  AND  SEVERAL  PROMIS- 
SORY NOTE,  76,  77,  235,  236, 
260. 

taken  as  security,  206,  251,  260,  261. 

in  case  of  change  of  firm,  216. 

payable  to  trustees  of  company,  258. 

indorsed  with  agreement,  258. 

by  directors,  551,  554. 

what  no  defence  on,  77,  n. 
JOINT  OWNERS  OF  STOCK,  125- 

127. 


JOINT  PROMISSORY  NOTE, 

given  as  guarantee,  235,  236. 

merger  of,  236. 
JOINT  STOCK  BANKS,  579-600. 

how  to  be  formed,  579,  584,  586. 

actions  by  and  against,  579. 

judgment,  &c,  579,  580. 

registration,  580. 

offices,  581  and  note. 

returns,  581,  582,  583. 

register  of  names,  &c,  581. 
shares,  588. 

manager,  582,  595. 

proving  in   bankruptcy  though  in- 
solvent, 302. 

calls,  582,  587,  591,  592,  n.,  607. 

public  officer,  600,  601. 

change  of  firm  of  customer,  583. 

notice,  584. 

pass  book,  583,  601,  607. 

capital,  584,  585. 
paid  up,  585. 

directors,  585,  591.     See  Directors. 

solicitor,  see  Attorney. 

shares,  582,  586,  587,591,  592. 

shareholders  withdrawing,  586. 

dividends,  589,  594. 

prosecution  of  officers,  &c,  601-605. 

executors,  589,  590. 

meetings,  596,  597. 
resolutions,  597. 

audit,  596. 

pass  book,  605-609. 

publication  of  accounts,  596. 

majority,  597. 

alteration  of  objeets  of  bank,  597, 
598. 

advances,  598. 

contracts,  599. 

winding  up   and   bankruptcy,  599 
613,  n. 
JUDGE'S  ORDER,  366,  487. 
JUDGMENT, 

against  public  officer,  478. 

sci.  fa.  on,  479. 

enforcing,  487,  488. 

KNOWLEDGE, 

when  notice,  181,  183,  184,  209. 
means  of,  when  notice,  292. 
imputing,  292,  351. 

LANCASTER,  usage  of  county  of,  as 
to  banking,  &c,  141,   142,   141, 
150,  152,  and  n. 
LARCENY, 

of  void  cheque,  19,  n. 
description  of  cheque  in,  78. 
of  clerk,  268,  622,  270. 
cashier,  269,  270. 
manager,  602-605. 


44G 


GRANT  OX  THE  LAW  OF  BANKING. 


LARCENY,  continued, 

bank  DOteB,   126,    L31. 

liability  of  members  of  banking  co- 
partnership, 476. 
joint  Btock  bank,  601-602. 
clerk,  tfcc,  of  Savings'  Bank,  622, 
note. 
LEASE, 
equitable  mortgage  of,  191, 194, 197, 

199,  200. 
of  house,  &c,  197,  n.,  199. 
goodwill,  &c.,  199. 
of  offices,  581,  n. 
LEGACY   DUTY,  transfer  on  books 

of  bank  to  evade,  134. 
LEGATEE, 

priority  of,  to  bank,  515,  565. 
as  to  calls,  488. 
LETTER,  effect  of,  with  remittance, 

155.  168. 
LIBEL,  bankers  suing  for,  303. 
LICENSE, 

to  issue  bank  notes,  446. 
as  to  copartnerships,  510,  see  n. 
LIEN, 
on  bill.--,  Ac,  deposited,  161,   163, 
L68,  289. 
policy,  183,  188. 
bill  of  sale,  324. 
shares,  189,  190,  284,  285,  286, 

'J -7.  I'M.  495. 
fixtures,  195. 
dividends,  9  i">. 
general,  251,  283-290. 
discharge  of,  310. 

in  cases  of  partners,  &c,  288,  310, 
311. 
one  partner,  288,  495. 
bankruptcy,  288,  324,  325. 
winding  up,  28<J,  551. 
on  cargo,  215. 

plate,  210,  284. 
equitable,  285,  286,  366. 
trust  prevailing  against,  284,  287. 
as  to  securities  left  casually,  284. 
priority  of,  288. 
realizing,  289,  290. 
extent  of,  290,  n. 
destroying,  290. 
LIMITATIONS  (STATUTE  OF,) 
as  to  banking  account,  '■'*. 
cheque,  63,  32,  33,  96. 
promissory  note  taken  as  security, 
216,  217. 
in  case  of  firm,  131,  132. 

equitable  mortgage,  198. 
between   London  and  country  bank- 
ers, 438. 
ofthree  years  as  to  members,  &c.  A  15. 
LIVERPOOL,   usage  of  bankers  at, 
397,  607. 


L<  >CA  1.  MANAGER.    Bee  Manager. 
LoXDoX  BANKERSj 
usage  of,  as  to  sending  for  money, 
Ac.  266,  n. 
bills  deposited,  153. 
LOSS, 

of  negotiable  instrument,  422,  423. 
principle  determining  incidence  of 

a,  173,  176,  425. 
from  negligence  or  crime  of  clerk, 
265,  266,  267. 

M  A  ( '  I IIXERY.     See  Mortgage. 
MANAGER. 
In  Banking  Copartnership, 

guarantee  for  conduct  of,  265. 

liability  of.  269,  .".1". 

how  regarded  in  law,  298,  517. 

taking  shares,  559. 

discounting,  388,  395. 

lien  of,  317. 

separate  trade,  395,  514. 

taking  deposit  on  eve  of  stoppage, 

170-172. 
suing,  468. 

giving  receipts,  &c.,  170-172. 
advancing  to  self,  514,  602. 

others,  519. 
indorsing,  515,  516. 
when   not   agent  of  copartnership, 

519,  548. 
commission  of,  515. 
his  position,  518,  519,  602. 
promissory  note  to,  516,  •">  1  7. 

by,  517. 
copartnership  liable  for  fraud  of.  ."1  8. 
accepting  bills  of  colouial  bank,  439, 

n.,  440. 
///  Joint  Stock  Bank, 
service  of  notices  on,  596. 
liability  of  company  for  acts  of,  297, 

298. 
signing  memorial,  582. 
duties  of,  595,  602-005. 
proceedings  against  and  by,  601. 
///  Savings1  Bank, 
duties,  618,  623. 

how  far   liable,   &C,  617,   618,    622, 

and  n. 

MARRIAGE  SETTLEMENT,  209. 
MEETINGS, 

1„  Banking  Copartnership, 

general,  51  '■'<. 

Bpecial.  513. 

resolutions  of.  514,  555. 
In  .l"iu/  Stock  Bank, 

ordinary,  general.  Ac.,  596. 

resolutions  of,  •"'•'7. 
MEMORANDUM, 

of  deposit  of  securities.    See  Deposit. 

form  of,  182,  U. 


INDEX. 


447 


MEMORANDUM,  continued. 

value  of,  193. 

false,  194. 

fresh,  when  needful,  217. 
MINES,  311. 
MONEY, 

"at  my  bankers,"  meaning  of,  2. 

"  all  my  ready,"  meaning  of,  2. 

"  in  hand,"  meaning  of,  2. 

"  all  my,"  meaning  of,  3. 

paid  into  bank,  3. 

bank  notes,  when  are,  405. 
MORTGAGE, 

equitable,  of  policy  of  insurance,  180, 
183,  185,  191,  192. 

agreements  as  to,  183,  199,  200,  202. 

of  reversionary  interest,  599,  n. 

of  title  deeds,  191,  193,  194,  197, 
198,  199. 

of  chattels,  211,  n.,  212. 

fixtures,  192,  n.,  195. 

machinery,  196,  594,  n. 

ship  and  freight,  213. 

lease,  197,  199. 

priority  of,  201. 

copy  of  Court  Roll,  203,  n.,  217. 

legal,  197,  199,  200,  n. 

shares,  493,  494. 

cautions  as  to  taking,  202,  203,  212, 
213,  214,  594. 

sub-mortgage  of  policy,  &c,  182. 

unwritten,  211,  n.  (z). 

of  ship  registered,  212,  213. 

satisfaction  of,  219. 
MORTGAGEE, 

right  to  rents,  &c,  of  equitable,  198. 

of  policy  of  insurance,  179,  183. 

sub-mortgagees,  182,  193,  n. 

notice  to,  212. 

of  shares,  493,  494. 

receipts  of,  186,  n. 

bank,  when  is  equitable,  192. 

equitable,  what  rights  of,  197,  198. 
See  Costs,  Sale. 
MUTUAL   CREDIT,  333,  334,  335, 
384,  385. 

whether  arises  on  deposit  of  money 
to  meet  bill,  &c,  338. 

NAVY  AGENTS,  294,  305,  n.,  314. 
NAVY  BILLS,  203,  n. 

discounting,  411. 
NE  EXEAT  REGNO,  573. 
NEGLIGENCE, 

in  discounting,  382-385. 
cashing  cheques,  63,  64. 
paying  bills,  &c,  111. 
taking  guarantee,  238-244. 
of  clerk,  265,  266. 
NOTICE, 
of  deposit.    See  Insurance. 
March,  1857.— 30 


what  sufficient,  181,  n.,  183,  185,  n. 
Onus  of  proving,  180,  181. 
to  debtor,  206. 

agent,  380,  n. 

trustee  and  executor,  179, 180, 20!), 
210. 
solicitor  of,  209,  n. 
of  mortgage  of  ship,  213. 

submortgage,  182. 
in  case  of  a  company,  180, 189,  207. 

313,  324,  n.,  380,  n.,  475,  n. 
of  lien,  189. 

act  of  bankruptcy,  421,  324. 

assignment  of  debts,  179,  and  n. 

loss  of  bank  notes,  425,  426. 

partnership,  306,  307. 

dissolution,  584. 

trusts,  492,  495. 

stopping  payment,  317,  408. 

sci.  fa.,  500,  and  n. 
to  branch  bank,  433. 
by  executor,  357,  573,  574. 

provisional  assignee,  219. 
to  member  of  Joint  Stock  Bank,  584. 

guarantor,  271. 
of  execution  against  member,  591. 

intention  to  forfeit,  592. 
service  of,  593. 
in  insolvency,  339. 

OFFICER.     See  Public  Officer,  Ma- 
nager. 
presumed  to  continue  as  such,  40 2. 
OFFICES,  581. 

lease  of,  &c,  581,  n. 
OFFICIAL  MANAGER, 

of  banking  copartnership,  506. 
effect  of  appointment  of,  551,  613,  n. 
suing,  574. 
ORDER, 
of  customer,  4,  6,  7,  323. 

his  assignees  may  sue  on,  323. 

of  stranger,  8. 
on  banker,  115-117,  323. 
form  of,  115,  117. 
when  revocable,  7,  118. 
disobeying,  6,  11,  323,  386,  n. 
for  payment  of  money,  13,  n. 

forgery  of,  430. 

bills,  &c,  323. 
bill  stamp  on,  20,  116,  117. 
to  obtain  payment,  174. 

acceptance,  &c,  119. 
to  distribute  funds,  &c,  118. 

transfer,  &c,  119,  120. 

place  to  credit,  &c,  120. 

hold  at  disposal,  120. 

invest,   121,  122,  348,  349,    350, 
351. 

receive  dividends,  &c,  122. 

debtor  to  pay  in,  135,  136. 


448 


GRANT    ON    THE    LAW    OF    BAN  KINO. 


ORDER,  continued. 
when  bills  remitted]  155. 
illegal,  128. 

■with  aeed  not  be  written,  117. 
most  be  written,  145,  n. 

PARTNERS, 
cheque  of,  44-4G. 
accountable  receipt  of,  134. 
joint  and  several  bond  of,  229,  230. 
bankruptcy  of,  131. 

in  banking,  291. 
mutually  liable  fur  fraud,  44,  121. 
clerk  of,  -14,  n. 

change  of  firm,  130,  131,  191,  216, 
217,221,225,  n.,  272,304,300, 
583. 

presumption  as  to,  306,  n. 
deceased,  291,  295,  296,  304,  n.,  305, 
309,  310,  312. 

presumption  of  privity  of,  296. 
retiring,  300,  304,  307. 

capital  of,  298-300. 
incoming,  306,  310. 
transfer  of  credit  to  new  firms,  305, 
310. 

assets  to  same,  307,  310. 
surviving,  295,  304,  305,  310,  312. 

discharge  of,  190. 
appropriation  of  payments  among, 

278,  305,  and  n. 
re-issue  of  notes  of  old  firm,  299. 
iu  more   than  one  firm,  300,  305, 

317. 
at  will,  298. 
in  single  speculation,  308,  309. 

mining  adventure,  311. 
bills  indorsed  to  bank  in  style  of 

firm,  310. 
title  deeds  of  firm,  309,  310. 
banker's  lien  as  to,  288. 
caution  as  to   crediting  firm,   312, 

313. 
bond  in  case  of  issue  of  notes,  449. 

:  It •  i  ationof  partnership,  449,  450. 
also  customers,  298,  299,  316. 
drawing  oul  balance,  &c.,  317. 
objecting  to  continue  account,  2R0. 
one  partner's  act-.  17  7, 189,292,311. 
;it  partner,  400-403,  and  n., 
431. 

how  -far  bind,  177,  293-295,  297, 
311. 

title  deeds,  191. 

separate   account,  298,   310-313, 
316. 
overdrawn,  299,  316. 

as  to  trust  funds,  317,  351. 

ad  of  bankruptcy,  400,  401. 

Collusion  with  one  of  firm  of  cus- 
tom, r-.  292. 


contributing  to  losses  beyond  his 
share,  291. 

releases,  24  1.  251. 

signs  for  "self  and  partners,"  'J  17. 
dissolution,  188,  303,  305,  401,  526, 

and  n.,  556,  n. 
In  Banking  Cujimtm  rshijis,  -153. 
nt'  more  than  six,  154,  458. 
sixtv-five  miles  from  London,  454, 

17.7.  459. 
within  that  distance,  477,  488. 
liability  of  each,  454. 
proceedings  against,  455. 
limitation  as  to,   155. 

as  to  equity,  456. 
origin  of  Banking  Act,  561. 
deceased  partner,  equity  as  to,  456. 
guarantee  given  to  221. 
drawing  bills.  45S,  45'.). 
ordinary  business,  528,  5! 
taking  name,  458. 
objects  of,  526. 
"  borrowing,  owing,  &c,"  439,  454, 

458,  459,  510. 
who  are  members,  497. 
account  of  names  of  members,  460, 
463,  464,  466. 
public  officers,  460,  464. 
copies  of  them,  464. 
register  of,  464. 

forms  thereof,  460,  461,  464,  n. 
officers,  462,  470. 

as  to  issue  of  notes,  462. 
secretary,  463,  463. 
"  members  for  time  being,"  499, 500. 
annual  returns,  &c,  463,  464,  466. 
suing  members,  457,  46s,  471,  477. 
petitioning  in  bankruptcy,  469. 
proving  in  bankruptcy  against  mem- 
bers,  469. 

though  insolvent,  302. 
suing  for  price  of  shares,  4  71. 
set-off,  478,  468. 
change  of  name,  471. 
judgment  where  does  not  bind,  472. 
deed  of  settlement,  474. 
deceased,  298,  299,  481,  482. 

relief  against  estate  of,  456,  481, 
482,  493. 
judgment  and  sei.  fa.,  478,  4  79,  481, 

499. 

decrees  in  equity,  481. 
execution  againsl  some,  479-482. 

generally,  455,  456,  483. 
winding  op,  484,  613  n. 

three  years'  liability,  &<■.,  455,  492, 

i...  504. 
judgment  by  collusion,  497,  498. 
'insolvency,  494,  302,  507. 
bankruptcy,  506. 
lien,  195.  ' 


INDEX. 


440 


PARTNERS,  continued. 

on  shares,  186. 
clergymen,  498. 
sci.  fa.,  483,  499-506. 

against  members,  483,  484,  499, 
502. 

second  class  of,  502,  503. 

executors,  483. 

husbands,  483. 

pleas  in,  503,  504,  n. 
who  not  liable  to  debts,  505,  506. 

calls,  488,  497. 
arrangements  amongst,  508. 
contracts  with,  457,  466,  511,  552. 

for  sale  of  shares,  491. 
general  meetings,  513. 
issue  of  notes,  462. 

re-issue,  509,  510. 
separate  business  and  firm,  522,  and 

n.,  523. 
contracts  made  at  branch  banks,  5 19, 

520. 
discontinuing  business,  526. 
when  bound,  519,  548,  549. 
liable  for  managers  fraud,  518,  520. 
dividends,  552. 
notice  to  one,  525. 
how  to  retire,  544,  556,  557-559, 564. 
buying  out,  512,  513. 
executors,  489,  491,  493. 
legatees,  488,  489. 
husbands,  492. 

bankruptcy  contrasted  with  winding 
up,  523,  613,  n. 

See  Directors,  Shareholders,  Ma- 
nager, Cashier,  Public  Officer, 
Contributories. 
PASS  BOOK, 

entries  in,  46,  139,  140,  143,  583. 

mistake  as  to,  608. 
as   evidence,   525,  n.,  607   and  n., 

311,  n. 
what  is,  605. 

credit  given  in,  when  binds,  607. 
effect  of  acquiescence  in  entries  in, 

606,  607. 
servant,  &c,  sent  with,  608,  609. 
PAYMENT, 

appropriation  of,  278-282. 
what  not  a,  309,  320,  388,  507. 
after  notice  of  bankruptcy,  323. 
of  legal  items,  282. 
by  solvent  partner,  401,  431. 
in  country  bank  notes,  404. 
protected  in  bankruptcy,  432. 
PENALTIES, 

for  not  making  returns,  444,  445. 
how  recovered,  510,  n. 
PLATE,  210,  284. 

PLEDGING  securities,  banker  liable 
for,  144-153. 


POST-DATING  cheque,  17. 
PROMISSORY  NOTES, 

stat.   of  Anne   does    not  apply   to, 

drawn  out  of  England,  435. 
made  payable  at  bankers,  106,  114. 

in  body,  114. 

in  memorandum,  114. 
by  bankers,  payable   at   ten    days 

sight,  403. 
to  manager,  &c.,  516. 

by  him,  517. 
drawn  in  Scotland,  treated  as  inland 

_  bills,  435. 
given  to  trustee,  133. 
protest,  where  not  necessary,  435. 

banker,  164,  207,  403. 
of  East  India  Company,  204,  205. 
207. 

Royal  Bank  of  Australia,  538. 
where  change  in  course  of  excln 

434,  435. 
lien  as  to,  289. 

restrictive  indorsement  of,  391,  n. 
incidental  expenses,  435. 
unstamped,  448. 
PUBLIC  COMPANY,  what,  485, 486, 

487. 
PUBLIC  OFFICER, 

In  Banking  Copartnership, 

judgment  against,  455. 

return  of  name  of,  460,  464. 

description  of,  461,  n. 

character,  462,  473, 475. 

when  to  be  appointed,  462. 

how,  470. 

right  to  sue,  463,  467,  475,  477. 

how  to  sue,  469. 

death,  &c,  468. 

as  defendant,  469,  474,  475. 

pleas,  474,  475,  477. 

after  dissolution  of  company,  47 1 . 
475. 

pleas  in  action  by,  471,  n. 

judgment  in  name  of,  472,  474. 
478. 

to  sue  on  covenants,  472,478, 48.'!. 

indemnity  to,  472,  510,  n. 

to  produce  papers,  472,  473. 

his  bankruptcy,  474. 
death,  476,  477. 

calls,  478. 

decree  against,  478,  481. 

judgment  against,  478,  481. 

execution,  479-482. 

when  not  to  sue,  516,  517. 

manager,  &c,  516,  517. 

proceedings  against  and  by,  600- 
605. 
In  Joint  Stock  Banks, 

suing,  600. 

death  of,  600,  601. 


450 


GRANT  ON  THE  LAW  OF  BANKING. 


PUBLIC  OFFICER,  continued, 

prosecutions,   4c,   against,    601- 
605. 

proceedings  by,  against  members, 
&c,  601,  602. 

RAILWAY  COMPANY, 
deposit  of  shares  in  a,  185,  n.,  188. 
ip  certificates,  188,  189. 
in  respect  of,  &c,  352. 
notice  of  lien  to,  189. 
RECEIPT, 
stamp  on  bankers',  4,  n.,  129, 377,  n. 
of  trustees,  349,  368. 

executors,  349. 
deposit,  136,  137. 
effect  of,  218,511. 
for  deposits  of  railway,  &c,  instal- 
ments, Ac,  352,  see  10  Q.  B.  691. 
for  purchase  money,  &c,  211. 
RECEIVER, 
cheque  of,  43. 
paying  into  bank,  352. 
REGISTRATION, 
of  joint  stock  banks,  580. 

banking  copartnership's  members' 
names,  sc,  164. 
RELEASE  of  guarantee,  &c.,231, 235. 
REMITTANCES, 
generally,  169-177,  433-437. 
foreign,  433-436. 
by  post,  or  usual  mode,  loss  of,  falls 

on  creditor,  437. 
of  bills  against  goods,  &c,  214. 
of  bills  for  sale,  155. 

clothed  with  a  trust,  142,  169. 
bills  for  discount,  386. 
indorsed  bills,  154. 
responsibility  of  bankers  on,  351. 
letter  accompanying,  155,  168. 
by  Country  Bank,  161-177,  415,  416. 
of  bank  post  bills,  168. 
RESTRAINING  ORDER,  355,365. 
RETIRING,  a  bill  of  exchange,  388. 
■  RETURNING,"  a  cheque,  66,  75. 
RETURNS, 

of  bank   notes   in  circulation,  440- 
145. 

partners'  names,   1  I  I. 

by  all  bankers,  444,  466,  485. 
hi  Banking  Copartnerships, 
of  name-  of  members,  ftc.,  160. 
public  officers,  460,  464. 
filing,  163. 

their  forms,  460,  461,  464,  n.,  465. 
dates,  161,  462. 
annual.  163,  464,  185,  488. 
pi  nalty,  A<-..  1 14,  145,  510. 
hi  Joint  Stock  Banks, 
<.f  names,  Ac,  of  members,  581. 
annual,  581. 


RUN,  sale  of  estate  in  case  of  a,  315. 

SALE, 

of  bank  note,  409. 

when  decreed,  191,  192,  198,  201. 

costs  of,  193. 
of  bill  of  exchange,  154, 155, 298,  n. 
Exchequer  bills,  296,  297. 
SAVINGS'  RANKS, 
defined,  614. 

banker  dealing  with  trustees  of,  345. 
allow  compound  interest,  614. 
filing,  &c,  rules,  &c,  of,  614. 
deposits,  614,  615. 
book,  616,  617. 
evasions  of  rules  of,  615,  616., 
feme  covert  depositing,  616. 
Friendly  Societies  depositing,  616. 
Building  Societies,  616. 
committees,  616. 
remedies  of  depositors,  617. 
investments,  618. 
annual  accounts,  618. 
oificers,  618-623. 
arbitration,  &c,  617  and  n. 
duties  of  actuary,  619,  620. 

cashier,  619,  620. 
certificate  of  conformity,  &c,  620. 
priority  of,  to  other  creditors,  620, 

621,  345,  n. 
trustees  of,  622. 
military,  623. 
naval,  623. 

stamps  and  other  duties,  623,  u. 
income  tax,  623,  n. 
SCIRE  FACIAS,  479,  483, 484,  492, 
499-505. 
pleas  in,  504,  n. 
afl&davit,  499. 

application  for,  500,  501  and  n.,  504, 
505. 
diligence,  501. 
SCRIP,  deposit  of,  188,  189. 
SECRETARY, 

of  banking  copartnership,  463-465. 

filling  up  cheques,  55  1. 
making  out  returns,  510. 
See  Return*. 
SECURITIES, 

may  be  applied  at  creditor's  option, 

330. 
required  on  issue  of  bank  notes,  447, 

449. 
deposit  of,  122,  123,  138. 

for    specific    purpose,     138-178, 

it;:,  338. 
against  advances,  178,  205,  233, 

331. 
fur  safe  custody,  150,  166,  204. 
when  "mutual  credit,"  in  respect 
of,  334,  335. 


INDEX. 


451 


SECURITIES,  continued. 
possession  of,  194,  211. 

casual,  194. 
assignment  of  lease,  &c.,  181. 

mortgage  of  ship,  514,  515. 

stock  in  trade,  181. 

policy  of  insurance,  188. 
marine,  214,  215. 
shares,  185. 
dock  warrants,  190. 
deposit  of  title  deeds,  190-202,  309. 

lease,  191,  194,  199. 

policy  of  insurance,  180,  181, 182. 

mortgage  deed,  200. 

trust  deeds,  204. 

exchequer  bills,  203. 

securities  of  third  person,  209. 

promissory   note,  205,    207,  21G, 
246,  418. 

copy  of  Court  Roll,  217. 

security  given  to  manager,  546. 

warrant  of  attorney,  205,  206. 

East  India  bills,  207,  208. 

land  order,  207. 

bond,  177,  206,  207. 

joint  and  several  instrument,  77. 

plate,  &c.  210,  284. 

jewels,  210. 
when  "  in  order   and    disposition," 

178,  179,  330.     See  Bankruptcy. 
when  a  continuing,  191,  216. 
interpleader,  as  to,  187. 
for  general  balance,  190,  191,  207. 
goods,  as,  211,  178. 
collateral,  229,  230. 
goods  at  sea,  as,  212,  213. 
receipt  for  purchase  money,  211. 
change  of  firm,  191,  216. 
interest  on,  216,  217. 
application  of,  330. 
value  of,  compared  with  debt,  217, 

218. 
bills  of  exchange,  as,  331,  333. 
guarantee,  233. 
post  obit  bond,  599,  n. 
mortgage   of  reversionary   interest, 

599,  n. 
SERVANT, 

sent  with  pass-book,  &c,  608. 
taking  country  bank  notes,  in  pay- 
ment, &c,  412. 
SET-OFF, 
In  Bankruptcy. 
right  of,  when  not  to  be  defeated,  318, 
319,  333,  334,  336,  343,  419. 

as  to  country  bank  notes,  336,  419. 

money  paid  for  bankrupt,  323. 

when    excluded    in    bankruptcy, 
323,  384,  386,  468. 

not  in  bankruptcy,  337,  338,  343, 
384. 


in  action,  for  shares,  337,  478. 
SETTLEMENT, 
of  accounts,  237. 
voluntary,  197,  199. 

See  Marriage  Settlement. — Deed 
of  Settlement. 
SHAREHOLDERS, 
In  Banking  Copartnership. 
who  are,  484,  489,  492,  497,  499. 
when  liable  in  bankruptcy,  314. 
who  is  owner  of  shares,  484,  485. 
buying  out,  512. 

as  to  books  of  copartnership,  547. 
binding,  the,  528,  538,  539. 
executor  of,  483,  484,  488,  491-493. 

notice,  &c,  573. 
husband,  483,  492. 
infant,  493. 
liabilities  of,  556-575. 

after  dissolution,  575. 

former  shareholder,  577. 

criminal,  577. 
how  to  retire,  556,  557-559. 
when  contributory,  &c,  560-574. 
In  Joint  Slock  Bank. 
who  are,  579. 

judgment  against,  579,  580. 
returns  of,  &c,  581. 
retiring,  586,  587. 
joint,  588. 
death,  &c,  588. 
larceny  by,  602. 
lunatic,  minor,  &c,  588. 
liability,  589,  590,  591  and  n. 
receipt  of,  589. 
executors,  589. 
register,  592. 
dividends,  594. 
duties  of,  596. 
SHARES,  185, 186, 188, 189,  214,  490. 
In  Banking  copartnership. 
what  are,  495,  496,  497. 
in  various  copartnerships,  496. 
not  essential,  485. 
register  book  of,  485,  n.,  497,  541. 

See  Books. 
lien  on,  186,  284,  286,  494-496. 
power  of  sale  of,  370,  486. 
suing  for  price  of,  471,  478. 
buyer  of,  483,  484. 
suing  strangers,   &c,  for  pri 

471,  478. 
transfer  of,  286,  486,  487,  491,  492, 

541,  542,  544,  570,  572. 
re-transfer  of,  544,  n. 
amount  of  each,  487,  n. 
charging,  486,  487,  488. 
second  incumbrancer  on,  488. 
bequeathing,  488-490,  493. 
pledging,  491. 
mortgaging,  493,  494. 


452 


GRANT  ON  THE  LAW  OF  BANKING. 


SHARES,  contimted, 

ling  up''  in  market,  547. 

forfeiting,  641,  553,  563. 

cancelling,  5  12,  531. 

specific  performance  respecting,  494, 
n.,  571. 

trustee   of,  investing  funds  in  pur- 
chase, 495. 

statutory.  496. 

stamp,  491. 

not  interests  in  land,  490,  496. 
goods,  wares,  &c,  491. 

are  trading  property,  &c,  521. 

when  "in  order  and  disposition,"  &c, 
491,  n.,  287. 
held  in  trust,  286,  n. 

sci.  fa.  against  owner  of,  499,  see  485. 

appropriation  of,  528. 

"  credit  shares,"  531-535. 

bankruptcy  as  to,  314,  521. 

executors,  489,  491. 

legatees,  488,  489. 

husband,  492. 
In  Joint  stock  Bunk,  487,  n. 

transfer  of,  582,  587,  591. 

numbers,  &c,  586. 

lien  as  to,  286. 

buying  up,  586. 

register,  588. 

death,    marriage,   bankruptcy,  &c, 

sale  of,  592.  n. 

calls,  582,  .>7,  591,  592,  n.,  C07. 
forfeiture,  592  and  n. 
railway,  185,  n.,  188. 
SHIP,  213,  214,  n.,  324. 
mortgage  of,  514. 
shares  in  a,  21 1.  n. 
"  SHORT  BILLS."     See  Bills  of  Ex- 
change. 
what  hills  presumed  to  be,  153,  n. 
SOLICITOR.     See  Attorney. 
ST  A. MI'S. 

on  receipts  of  hankers,  4,  n. 
cheques  and  exemptions,  13,  14,  15, 

10,  27,  38,  97-99,  461. 
cancelling,  1 1,  99. 
on  order  on  hanker,  20,  24, 116, 117. 
adhesive,  on  cheques,  99,  103. 
as  to  acknowledgment,  &c,  129,  451. 

exemption  abolished,  451. 
guarantee,  221,  n. 
bond  to  replace  stock,  357,  n. 
promissory  note  by  way  of  guarantee 
may  require    agreement   stamp, 
256,  259. 
letter  of  attorney  to  sell,  &c,  stock, 

371,  n. 
transfer  of  bank  stock,  376,  n. 
on    security    for    transfer,  &c,  of 
stock,  356,  n. 


on  altered  promissory  note,  404. 
allowance  of  useless,  452. 

hank  notes,  400.   I  17,   I  I-. 
on  assignment  of  policy,  186,  n. 
transfer  of  shares,  491. 
notes  of  copartnerships,  &c,  509. 
bond  for  payment  of,  509,  510. 
savings'   hanks,  &c,  exempt  from, 
623,  n. 
STOCK, 

re-investing,  124,  125,  351. 
keeping  account  of,  126. 
sale  of)  292,  296,  351. 
nature  of  public,  353  and  n. 
offences  as  to,  35  1,  355. 
transfer  of,  354,  359,  363. 
crimes  respecting,  177,  355. 
by  joint  tenant,  358. 
trustees,  351,  367. 
executors,  360. 
one  partner,  177. 
dividends,  355,  356,  363,  367,  376. 

unclaimed,  374. 
purchase  of,  through  banker,  438. 
transfer  of,  into  court,  367,  n. 

out  of  court,  367,  n. 
bequest  of,  377. 
replacing,  296,  297,  351. 
joint  owners  of,  364,  369. 
infant,  369. 
lunatic,  368. 
feme  covert,  369. 
distringas,  365. 
sale  of,  351,  370,  371. 
restraining  order,  355,  365,  367. 
judge's  order,  366  and  n. 
stop  order,  366  and  n. 
vesting  order,  368,  369. 
STOP  ORDER,  366. 
STOPPING   PAYMENT,   177,  412. 
415,  417,433. 
effect  as  to  hank  notes,  317,  336, 
399,  400,  408,412,413,420. 
hills  discounted,  386. 
compromise  on,  508. 
evidence  of  dishonesty,  315. 
notice  of,  317. 

manager  indorsing,  Arc,  575. 
receiving  deposits  on  eve  of,  170- 
172.  ' 
of  colonial  hank,  538,  539. 
SUB-MORTGAGE, 

of  poliev  of  insurance,  1S2,  193,  n. 
SURETY,  77,  216,  n.,  226,  227,  n., 
228,  230,  237,  240,  241,  245,  246, 
252,  257,  266,  275,  295,  u. 

TIME, 
given  to  principal  under  guarantee, 

230. 
caution  as  to  giving,  231,  232. 


INDEX. 


453 


TIME,  continued. 

when  not  a  discharge,  236. 
when  is,  238. 
properly  given,  238. 
TITHES,  201. 
TITLE  DEEDS, 

deposit    of.       See    Securities    and 

Mortgage. 
caution  as  to  taking,  190. 
of  a  partnership,  309. 
of  one  partner,  191. 
TRANSFER, 
of  stock,  349,  354,  355,  356,  358, 
371. 
credit  to  new  firm,  305. 
assets  to  same,  307,  310. 
TREASURER, 

of  Poor  Law  Union,  275. 

friendly   society,   321,   340,    343, 

620. 
commissioners,  &c,  341,  342. 
corporations,  346. 
savings'  banks,  345,  n.,  620. 
TRUST  DEEDS,  lien  as  to,  284. 

TRUST  FUNDS,  124,  287,  317,  347, 
495,  2  K.  &  J.  560. 

TRUSTEES, 

transfer  of  stock  by,  367,  368. 
depositing  trust  funds  in  bank,  &c, 

346-352,  364. 
receipt  by,  368. 
investing  in  bank  stock,  375. 

shares,  495. 
warrant  of  attorney,  472. 
affidavit,  492. 
notice  to  one,  179,  180. 
when  contributories,  568. 
corporation,  374. 
cheques  of,  41,  42,  43. 
payment  to  one,  349. 
promissory  note  to,  133. 
of  voluntary  settlement,  107. 
of  marriage  settlement,  209. 

infant,  133,  134. 
accounts  of,  281,  n.,  282,  317,  342, 

346-348,  564. 
forging  signature  of,  358. 
of  savings'  banks,  345. 

personally  liable,  617,  618. 

investing,  618. 

duties  of,  618. 
TRUSTS, 

prevail  over  security,  250,  252. 

lien,  284,  287. 
Bank  of  England  does  not  notice, 

363-365. 
bankers   generally   do    not   notice, 

492. 
affidavit  as  to,  492. 


joint    stock    banks   do   not   notice, 
589. 

USAGE, 

of  bankers,  361,  397. 
in  Devonshire,  266. 
of  Liverpool.     See  Liverpool. 
Lancashire.     See  Lancaster. 
London.   See  London  Bankers. 
Bristol,  288,  n. 
Bank  of  England,  360,  n. 

WARRANT  OF  ATTORNEY  AND 
POWER  OF  ATTORNEY,  233- 

237. 
to  transfer  stock,  356,  357,  362,  370. 

confess  judgment,  233,  237. 
forging,  358. 
filing,  234. 

giving  to  trustees  of  bank,  472. 
notice  of  deposit  of,  206. 
setting  aside,  479. 
to  sell  shares,  491. 

give  receipts,  186,  n. 
merger,  236. 
WILL, 

cheque  as  a,  102. 
entry  of  probate  of,  589. 
not  to  be  registered,  &c,  360. 
bequests  of  notes,  &c,  in,  405. 
WINDING-UP, 
Banking  Copartnerships,  484,  490, 

506. 
when  to  be  wound  up,  523,  see  613,  n. 
executor,  when    contributory,    530, 

531,  563,  567,  574. 
seller  of  shares,  when  not  contribu- 
tory, 541. 
allottee  of  shares,  541. 
expenses  of  directors,  when  allowed, 

313. 
retiring  director,  542. 
shareholders,  549,  550,  551. 
relief  under  Winding-up  Acts,  549, 

550,  551,  n.,  see  613,  n. 
liabilities     of    contributories,    560, 

561. 
official  manager,  551. 
who  are  contributories,  560-562, 565, 
571,  566. 

executor,  563,  564,  567. 

infant,  566. 

trustee,  568. 

purchaser  of  shares,  571. 

husband,  493,  n.,  571,  n.,  572. 

wife,  572. 

ne  exeat  regno  against,  573,  n. 

not  necessarily  one  who  is  liable 
inter  socios,  564. 
who  not,  574,  541,  573. 
effect  of,  574. 


454 


GRANT  ON  THE  LAW  OF  BANKING. 


WINDING-UP,  continued. 

as  to  creditors,  .'>7_.  574. 
Joint  Stock  Banks, 
when  to  be  wound  up,  599. 
bankruptcy  and  winding-up  of,  613, 
note. 


Colonial  Banks, 
when  applied  to,  608-613. 

WITNESS, 

duty  of  banker  as,  3,  n. 
cashier  as,  608. 


LAW    LIBRARY 

OF 
LOS  ANGELES  COUNTY 


UC  SOUTHERN  REGIONAL  LIBRARY  FACILITY 


AA    000  770  130    3 


